Chapter 9, Problem 2MCQ

To determine

The question requires us to determine the option which leads to efficiency in the market.

Explanation of Solution

The market is said to be efficient if it is optimally utilizing its resources and producing the potential output. Inefficient market:

• The quantity supplied equals the quantity demanded
• There is no surplus or shortage of commodities, and
• Deadweight loss is zero.

In the given options:

• A price ceiling generates a shortage of products in a market.
• A price floor results in a surplus of products in a market.<
• Quantity control and a quota create a deadweight loss in a market.

So, price ceilings, price floors, quotas, and quantity control are examples of an inefficient market.

Thus, option “e” or “none of the above” is correct.