Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased supply of goods
B
Shortages of essential products
C
Improved product quality
D
Decreased consumer demand
Understanding the Answer
Let's break down why this is correct
Answer
A potential unintended consequence of government-imposed price controls in a free market is that they can lead to shortages of goods. When the government sets a price that is too low, it can make products more affordable for consumers, but it may also discourage producers from making enough of those products. For example, if the government caps the price of bread to keep it cheap, bakers might not find it profitable to produce bread, leading to fewer loaves being available in stores. As a result, consumers may find it hard to buy bread, even though the price is low. This shows how price controls can create problems by disrupting the natural balance of supply and demand in the market.
Detailed Explanation
When the government sets a price too low, sellers may not want to sell. Other options are incorrect because Some might think lower prices mean more goods; People may believe that lower prices lead to better quality.
Key Concepts
shortages
government intervention
unintended consequences.
Topic
Price Controls and Market Outcomes
Difficulty
hard level question
Cognitive Level
understand
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