A binding price ceiling causes:
OA surplus and efficiency loss from underproduction
OA surplus and efficiency loss from overproduction
OA shortage and efficiency loss from underproduction
OA shortage and efficiency loss from overproduction

Question

kjohnson17750 kjohnson17750

07-05-2024
Business

Answered

A binding price ceiling causes:
OA surplus and efficiency loss from underproduction
OA surplus and efficiency loss from overproduction
OA shortage and efficiency loss from underproduction
OA shortage and efficiency loss from overproduction

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-05-07T16:22:00-04:00

The correct answer is:
A shortage and efficiency loss from underproduction.

Explanation:
1. Shortage: A binding price ceiling is a government-imposed limit on how high a price can be charged for a product. When the price ceiling is set below the market equilibrium price, it creates a situation where the quantity demanded exceeds the quantity supplied, leading to a shortage of the product in the market.

2. Efficiency loss from underproduction: Due to the shortage caused by the price ceiling, producers are not able to produce the quantity that would be produced at the market equilibrium. This results in an efficiency loss as the economy is not operating at its maximum potential level of output, causing a loss in overall welfare.

Therefore, a binding price ceiling causes a shortage of the product and efficiency loss from underproduction.

A binding price ceiling causes: OA surplus and efficiency loss from underproduction OA surplus and efficiency loss from overproduction OA shortage and efficiency loss from underproduction OA shortage and efficiency loss from overproduction

Answer :

Other Questions

A binding price ceiling causes:
OA surplus and efficiency loss from underproduction
OA surplus and efficiency loss from overproduction
OA shortage and efficiency loss from underproduction
OA shortage and efficiency loss from overproduction