In competitive markets,binding price floors and binding price ceilings lead to
A)fairer prices for consumers and producers,and therefore are better for society as a whole.
B)a reduction in deadweight loss.
C)an overall reduction in economic surplus,and therefore to market inefficiency.
D)an overall increase in economic surplus,and therefore to market efficiency.
E)a maximization of economic surplus.

Question

Quizplus · Accepted Answer

Binding price floors and binding price ceilings create market inefficiency by creating market imbalances between consumer and producer surpluses. This ultimately reduces the overall economic surplus in the market. As a result, the best answer is C.

In Competitive Markets,binding Price Floors and Binding Price Ceilings Lead