When an Effective Price Ceiling Causes a Shortage, Some of the Buyers

question 258

Multiple Choice

When an effective price ceiling causes a shortage, some of the buyers who value the good the most may not be able to get the good. Why does this occur?

• A) The highest-value users cannot outbid the lower-valued users and so the seller cannot distinguish between them.
• B) The highest-value users are eliminated from the market due to the price ceiling.
• C) The price ceiling causes the price to rise so high that even the highest-value users cannot afford the good.
• D) The government purchases most of the goods.

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