APFIVE Price Floor Effects with Decreasing Returns
What would likely be an unintended consequence of government-imposed price floors above equilibrium prices for goods produced under decreasing returns to scale?
A
Surplus of goods due to decreased demand and increased production costs.
B
Perfect competition converts into a monopolistic competition as firms gain pricing power.
C
Immediate industry-wide adoption of more efficient technology to reduce production costs.
D
Shortage of goods since producers cannot cover production costs at higher output levels.
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