Legal Limits on Prices Will Tend to Cause Misallocation of Resources

question 167

Multiple Choice

Legal limits on prices will tend to cause misallocation of resources because

• A)production (or opportunity) cost no longer corresponds to market price.
• B)people are unable to determine their preferences at the high or low price.
• C)producers no longer have incentive to be profitable.
• D)consumers no longer have incentive to spend their income efficiently.
• E)All of the above are correct.

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Definitions:

Variables

Elements, features, or factors that are likely to vary or change and can be measured, controlled, or manipulated in research.

Negative Linear Manner

A relationship between two variables where an increase in one variable corresponds with a decrease in the other, in a linear fashion.

Scatterplot

A type of plot or graphical representation showing the relationship between two variables by displaying data points on a two-dimensional axis.

y-Intercept Regression Coefficient

In linear regression, it is the value of the response variable when all predictor variables are zero, representing the point at which the regression line crosses the y-axis.