Multiple Choice
Why do shortages develop under a binding price ceiling?
A) It encourages sellers to produce more of the product.
B) It encourages buyers to purchase less of the product.
C) It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
D) It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market.
E) It encourages sellers to increase the quality of the product they sell, which, in turn, increases the quantity demanded.
Correct Answer:
Verified
Correct Answer:
Verified
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