When policymakers set prices by legal decree, they...?
a. obscure the signals that normally guide the allocation of society’s resources.
b. are usually following the advice of mainstream economists.
c. improve the organization of economic activity.
d. are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.
Which do you think is the best answer?
I have no idea.
Do price controls cover up normal distrubtion of resources? Do economists usually advocate price controls? Do price controls improve organization? Who is sacrificing fairness when price controls are instituted?
Economics don't generally advocate price controls. but i really don't know what the answer is
This article should help you understand price controls.
http://www.econlib.org/library/Enc/PriceControls.html
The correct answer is a. obscure the signals that normally guide the allocation of society's resources.
When policymakers set prices by legal decree, it means that they are imposing certain price levels in the market through government regulation. This can be done to control inflation, protect consumers, or achieve specific objectives. However, such intervention disrupts the natural market forces of supply and demand, which are key signals that guide the allocation of resources.
In a market economy, prices act as information signals that help individuals and businesses make decisions about what to produce, how much to produce, and what to consume. When prices are set by policymakers through legal decree, it distorts these signals, making it difficult for businesses and individuals to efficiently allocate resources and make rational economic choices. This can lead to inefficiencies and misallocations of resources.
Therefore, when policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources, which is option a.