Create an account
Loss in total surplus that occurs whenever action or policy reduces quantity transacted below equilibrium quantity
Inefficient allocation to consumers
Consequence of price ceilings; people who want good badly and are willing to pay high price don't get it, and those who care relatively little about good and are only willing to pay low price do get it
Inefficiently low quality
Consequence of price ceilings; sellers offer low-quality goods at low price even though buyers would prefer higher quality at higher price
Market in which goods are bought and sold illegally either because it is illegal to sell them or because prices charged are legally prohibited
Inefficient allocation of sales among sellers
Caused by price floors; those who would be willing to sell the good at lowest price are not always those who actually manage to sell it
Inefficiently high quality
Consequence of price floors; sellers offer high quality goods at high price, even though buyers would prefer lower quality at lower price
Consequence of quantity control; difference between demand price and supply price at a given quantity; price paid by buyer is higher than price received by seller
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