<p>Those are all <em>potential</em> consequences of price controls. It would all depend on how the price controls were done, what measures were put in place alongside them, and all the context of the good itself.</p>

<p>If the price is set at too high a level, excess supply may occur. If too low, excess demand may occur. If it's a good with an extremely limited market that is met under the price control, then no unexploited opportunities may exist. If potential demand is greater than the rate at which it can be retailed, then people may spend a lot of time waiting in line to acquire the good. And underground markets may emerge in any case.</p>

CC BY-SA 3.0
2016-08-01T10:22:16.500Z
2016-08-01T10:22:16.500Z
410 gone
<p>I have this MCQ homework that I would like your opinion about</p>

<p>Suppose government chooses to impose a price control on a good. Which of the following is NOT a potential consequence of the restrictions on price?   </p>

<ol>
<li>Excess supply may occur.</li>
<li>Excess demand may occur.</li>
<li>No unexploited opportunities will exist.</li>
<li>People may spend a lot of time waiting in line to acquire the good.</li>
<li>Underground markets may emerge.</li>
</ol>

<p>I think the answer is 3 because when black market exist with shortage and ppl will want to exploit the situation. </p>

CC BY-SA 3.0
2016-08-01T21:40:40.967Z
While EnergyNumbers is correct, you're probably right that if you have to choose one answer, the answer that is being sought is 3— the difference being that the question apparently implicitly assumes that the price controls bind (and, as EnergyNumbers correctly notes, they might not)
dismalscience
CC BY-SA 3.0
2016-08-02T07:09:24.503Z
It rather depends on whether the control is a maximum legal price or a fixed legal price.  My guess is that the question is about a maximum.
Henry
CC BY-SA 3.0
2017-08-05T07:15:58.203Z
I believe the answer is "No unexploited opportunities will exist." I believe we had the same MCQ question for homework.:)
Dan
<microeconomics>
If government impose price control, what happens?
Jane
# If government impose price control, what happens?

(Asked by: username_0 on 2016-08-01)

I have this MCQ homework that I would like your opinion about

Suppose government chooses to impose a price control on a good. Which of the following is NOT a potential consequence of the restrictions on price?

1. Excess supply may occur.
2. Excess demand may occur.
3. No unexploited opportunities will exist.
4. People may spend a lot of time waiting in line to acquire the good.
5. Underground markets may emerge.

I think the answer is 3 because when black market exist with shortage and ppl will want to exploit the situation.

**Tags:** microeconomics

> **Comments:**
> **username_1**: While EnergyNumbers is correct, you're probably right that if you have to choose one answer, the answer that is being sought is 3— the difference being that the question apparently implicitly assumes that the price controls bind (and, as EnergyNumbers correctly notes, they might not)  
> **username_2**: It rather depends on whether the control is a maximum legal price or a fixed legal price.  My guess is that the question is about a maximum.  
> **username_3**: I believe the answer is "No unexploited opportunities will exist." I believe we had the same MCQ question for homework.:)  

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## 1 answers

### Answer by username_4 on 2016-08-01. Score: 1

Those are all *potential* consequences of price controls. It would all depend on how the price controls were done, what measures were put in place alongside them, and all the context of the good itself.

If the price is set at too high a level, excess supply may occur. If too low, excess demand may occur. If it's a good with an extremely limited market that is met under the price control, then no unexploited opportunities may exist. If potential demand is greater than the rate at which it can be retailed, then people may spend a lot of time waiting in line to acquire the good. And underground markets may emerge in any case.


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