Question

The economic tenet that best and most directly explains why a government-imposed price ceiling on soybeans will cause the market value of soybeans to rise is

a. the law of diminishing marginal returns

b. the law of diminishing marginal utility

c. the principle of comparative advantage

d. Arrow's impossibility theorem

e. the TANSTAAFL principle

Answer 1

Option e

The full form is there is nothing such thing as free lunch, which means in reality every thing has a cost which needs to be borne by someone or other and cannot be obtained for free.

So, when a government induces price ceiling, it limits the maximum price that could be charged to consumer. Now, with the price ceiling, the supplier gets demotivated and supplies lesser quantity which would leads to shortages and thus leading to black market at a higher price or the difference price needs to be borne by the government to sustain which would again a transfer of burden on the public.