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Answer to Question #233415 in Microeconomics for Diane
Question #233415
Why are price ceilings said to be inefficient? Can the government restore efficiency by imposing a production quota along with the price ceiling? Who benefits and who loses from such a program?
Expert's answer
Price ceilings are known to be inefficient when they do not change market participants' choices. The government may restore effectiveness through imposing production quota on a price ceiling since it prevents falling of price below respective level.
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