An effective price ceiling on food increases economic efficiency. True or False?
Group of answer choices
No answer text provided.
False
True
No answer text provided.
The price ceiling is nothing but a cap of the prices that can be charged for a product by regulators or the government. Both the price floor and price ceiling leads to a deadweight loss in the absence of externalities. Both the price floor and price ceiling lead to the market quantity which is different from what would occur in equilibrium.
Thus, An effective price ceiling on food will not increase the economic efficiency rather lead to an economic output which is lesser than the effective output.
Thus, the given statement is False.
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