An effective price ceiling tends to A) increase quantity ...

[justinmsk]

An effective price ceiling tends to
 
  A) increase quantity supplied.
  B) decrease quantity demanded.
  C) leave quantity supplied and demanded unchanged.
  D) do none of the above.

Question 2

Explain the equity-efficiency trade-off. Give an example of conflicting equity and efficiency outcomes of a policy.
 
  What will be an ideal response?

[Jossy]

Answer to Question 1

D

Answer to Question 2

The equity-efficiency trade-off refers to the trade-off between ensuring an equitable distribution of resources (equity) and increasing social surplus or total output (efficiency). A progressive tax system helps in the redistribution of income from the rich to the poor and ensures greater equity. However, it discourages the rich to work and save more.

[justinmsk]

Gracias!

[cpetit11]

Excellent