Question

In which two ways do market controls affect pricing? (Check all that apply.)

A. Price becomes secondary in the control fluctuation eliminates
b. price helps to regulate productivity and performance
c. Price indicates how valuable the service or good is.
d. Price competition has the effect of controlling productivity and performance

Answer 1

Market controls like price controls can distort the perceived value of goods and services (option c) and hamper productivity and performance by interfering with market competition and incentives. (option d)

Step-by-step explanation:

Market controls, such as price controls, impact pricing in several ways. Firstly, price controls can affect how valuable a service or good is perceived by interfering with the natural signaling function of prices in a market economy. When prices are set artificially low or high, they no longer reflect the true scarcity or abundance of a good, which can lead to shortages or surpluses. Secondly, these controls impact productivity and performance by distorting incentives for both consumers and producers.


Controlled prices can lead to diminished competition, which may reduce the incentive to improve productivity or performance. Ultimately, price controls can be counterproductive because they hamper the ability of the market to reach equilibrium, creating inefficiencies.