Economics · Economic Systems
An economy transitioning from a Command Economy to a Market Economy privatizes partial production while maintaining price subsidies and public services. Following a supply shock, price spikes occur. Re-imposing strict price controls on essential commodities in this transitional phase is most likely to result in which economic outcome?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A transition to a traditional economy governed by village customs.
- 2A complete shift back to a stable command economy without public dissatisfaction.
- 3Shortages, artificial scarcity, and black marketing of the price-controlled goods.✓
- 4Immediate market equilibrium with no impact on supply or distribution.
Correct answer
Shortages, artificial scarcity, and black marketing of the price-controlled goods.
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