Question

Price controls are sometimes used when the natural operation of free markets leads to: positive externalities. undesirable outcomes. an efficient distribution of goods. a trade deficit.

Answer 1

When a price controls are used, the natural operation of free markets leads to positive externalities.

What is a positive externalities?

This refers to a condition that exists when the production and consumption of a good or service benefits a third party not directly involved in the market transaction.

Therefore, the Option A is correct.

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Answer 2

Price controls are sometimes used when the natural operation of free markets leads to undesirable outcomes. Option B. This is further explained below.

What are Price controls?

Generally, Price control is simply defined as a government rule setting a maximum price for specific commodities and services.

In conclusion, Occasionally, price restrictions are implemented when the normal functioning of free markets results in unwanted consequences.

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