In a market with a binding price control, a. there is an imbalance between the quantity supplied by sellers and the quantity demanded by buyers. b. the costs of production are fully reflected in the price paid. c. the price observe reflects the scarcity of the good. d. all of the above are true.

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Business

Mallory Ritter

19 March, 02:59

In a market with a binding price control, a. there is an imbalance between the quantity supplied by sellers and the quantity demanded by buyers. b. the costs of production are fully reflected in the price paid. c. the price observe reflects the scarcity of the good. d. all of the above are true.

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Answers (1)

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Keegan Hurst · Answer 1

The answer is: A) there is an imbalance between the quantity supplied by sellers and the quantity demanded by buyers.

Explanation:

Price controls can be divided into

price ceilings: the price of a certain product or services can not be higher than its specified price ceiling price floors: the price of a certain product or services can not be lower than its specified price floor

When a price ceiling is enforced, the quantity demanded of a product or service will exceed the quantity supplied of that product or service, since the price is kept artificially below the equilibrium level.

When a price floor is enforced, the quantity supplied of a product or service will exceed the quantity demanded of that product or service, since the price is kept artificially above the equilibrium level.