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What are the sources of inefficiency when price ceilings are introduced?
What are the sources of inefficiency when price ceilings are introduced?
What are the sources of inefficiency when price ceilings are introduced?
1) inefficient allocation to customers: people who want the good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are willing to pay a low price do get it
2) wasted resources: people expend money, effort, and time trying to cope with the shortages caused by the price ceiling
3) goods offered are of inefficiently low quality: sellers offer low-quality goods at low price even though buyers would prefer high-quality goods at higher prices
4) black market: a market where goods are bought and sold illegally - either because it is illegal to sell them or prices charged are illegally prohibited by a price ceiling
1) inefficient allocation to customers: people who want the good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are willing to pay a low price do get it
2) wasted resources: people expend money, effort, and time trying to cope with the shortages caused by the price ceiling
3) goods offered are of inefficiently low quality: sellers offer low-quality goods at low price even though buyers would prefer high-quality goods at higher prices
4) black market: a market where goods are bought and sold illegally - either because it is illegal to sell them or prices charged are illegally prohibited by a price ceiling
1) inefficient allocation to customers: people who want the good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are willing to pay a low price do get it 2) wasted resources: people expend money, effort, and time trying to cope with the shortages caused by the price ceiling 3) goods offered are of inefficiently low quality: sellers offer low-quality goods at low price even though buyers would prefer high-quality goods at higher prices 4) black market: a market where goods are bought and sold illegally - either because it is illegal to sell them or prices charged are illegally prohibited by a price ceiling
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