Government-imposed quantity restrictions
A) generate a higher price for the good than would prevail under freely competitive markets.
B) generate a lower price for the good than would prevail under freely competitive markets.
C) does not affect the price of the good because quantity restrictions always ban sale of the good completely.
D) can cause prices to either be higher or lower, but always cause excess quantities supplied to develop.

Question

Quizplus · Accepted Answer

Government-imposed quantity restrictions typically limit the supply of a good or service, resulting in a reduction in quantity supplied. When demand remains the same while supply declines, the price for the good inevitably rises. Therefore, quantity restrictions imposed by governments generate a higher price for the good than would prevail under freely competitive markets.

Government-Imposed Quantity Restrictions