Price floors would create all of the following effects EXCEPT:

A) surpluses.

B) deadweight loss.

C) wasteful decreases in product quality.

D) misallocation of resources.

Answer: C) wasteful decreases in product quality.

Price floors and price ceilings are government policies that regulate the price of goods or services. They are pricing policies set by the government that prevents the price of a product or service from going below a level, and are usually set above the price equilibrium.

Price floors can lead to situations such as excessive supplies and lower demands, but not to a wasteful decrease in product quality.

The product quality will not decrease because producers have to maintain or increase the quality to make their products more desirable amongst other competitor goods released in the same market.

Economics

3 years ago

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