Which of the following correctly identifies a problem with price regulation?
A) It minimizes social surplus.
B) It minimizes consumer surplus.
C) Sellers do not have an incentive to cut costs.
D) Government intervention increases deadweight loss.
C
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Many environmentalists have advocated a substantial increase in the gasoline tax to cut down the federal deficit and to reduce pollution due to auto emissions. Such a tax increase would be devastating to people who commute significant distances to work. In fact, it would provide an incentive to relocate closer to work or change jobs. Economists refer to such effects of taxes as the
a. burden of a tax. b. regressive incidence of a tax. c. incidence of a tax. d. excess burden of a tax.
The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on
a. the natural rate of unemployment and monetary growth. b. the natural rate of unemployment, but not monetary growth. c. monetary growth, but not the natural rate of unemployment. d. neither monetary growth nor the natural rate of unemployment.