Government attempts to lower, raise, or simply stabilize prices can: shift the distribution of surplus. create unintended side effects. reduce efficiency of a market. All of these are true.
Government attempts to lower, raise, or simply stabilize prices can: shift the distribution of surplus. create unintended side effects. reduce efficiency of a market. All of these are true.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please help me find the answer to the following. I got the answer wrong.
Transcribed Image Text:**Question:**
Government attempts to lower, raise, or simply stabilize prices can:
- ○ shift the distribution of surplus.
- ● create unintended side effects.
- ○ reduce efficiency of a market.
- ○ All of these are true.
**Explanation:**
This question explores the economic effects of government intervention in pricing. Each option outlines a potential consequence:
- **"Shift the distribution of surplus"**: This refers to how such interventions can alter the distribution of economic benefits between consumers and producers.
- **"Create unintended side effects"**: Interventions might lead to outcomes not anticipated by policymakers, such as market distortions or imbalances.
- **"Reduce efficiency of a market"**: Government actions may lead to inefficiencies, such as reduced competition or misallocation of resources.
- **"All of these are true"**: Indicates that all the mentioned effects can happen simultaneously due to government price interventions.
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