Why does a government place price ceilings, such as rent control, on some “essential” goods?
A. to prevent the development of a black market
B. to encourage an increase in supply of necessary items
C. to limit the impact of equilibrium pricing
D. to help reduce demand for these goods

Question

Why does a government place price ceilings, such as rent control, on some “essential” goods?
	A. to prevent the development of a black market 	
	B. to encourage an increase in supply of necessary items 	
	C. to limit the impact of equilibrium pricing 	
	D. to help reduce demand for these goods

anonymous · Answer

it cannot be D as price ceiling would increase demand. Not A as black market is a consequence of price ceilings and it would neither encourage supply as there will be a reduction in the producer surplus because of the price ceiling hence i believe the answer is A.

Hope this helps :)

anonymous · Answer

It's C. since the equilibrium price would be above the price ceiling. The ceiling is introduced to prevent the market from reaching this price.

anonymous · Answer

ohh my bad the answer is C but i wrote A twice...the answer is C :p

anonymous · Answer

Yeah, definitely C. And definitely a result of "economic populism"--the politicians act like they are the good guys but the result is only long lines and shortages...