Question

According to the textbook, government price controls fail because: A. they are not enforced. B. legislation cannot repeal basic economic motives. C. bureaucrats lack accurate market data. D. firms ignore the restrictions.

Answer 1

Answer:

The correct answer is letter "B": legislation cannot repeal basic economic motives.

Explanation:

Government price controls are regulations imposed by the central government of a country to set limits on prices of certain goods or services because of a surplus, shortage or simply to maintain the demand and supply of those products at their equilibrium level.  

However, the demand for some of those products could be unpredictable because individuals could react in opposite directions even if the government has set rules against consumers' favor. Customers' motives might not be always repealed by legislation.