The presence of a price control in a market for a good or service usually is an indication that:

• A. supply and demand are always equal at the controlled price
• B. there is no government intervention in the market
• C. the equilibrium price is considered undesirable by policymakers
• D. the market is perfectly competitive and efficient

Answer: (C)

Verified step by step guidance

1. Understand the concept of price controls: Price controls are government-imposed limits on the prices that can be charged for goods or services in a market. They are typically implemented to achieve certain policy goals.
2. Recall the definition of equilibrium price: The equilibrium price is the price at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition without shortages or surpluses.
3. Analyze why policymakers might impose price controls: Policymakers usually intervene with price controls when they believe the equilibrium price leads to undesirable outcomes, such as prices being too high for consumers (price ceilings) or too low for producers (price floors).
4. Evaluate the options given: Since price controls are a form of government intervention, the statement that there is no government intervention is incorrect. Also, price controls often cause supply and demand to not be equal at the controlled price, leading to shortages or surpluses.
5. Conclude that the presence of a price control indicates that the equilibrium price is considered undesirable by policymakers, which motivates the intervention to alter market outcomes.