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When a tax is imposed, the resulting decrease in consumer and producer surplus is known as a?

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A tax is imposed, the resulting decrease in consumer and producer surplus is known as a price ceiling. The imposed maximum price a seller is permitted to charge for a good or service is known as a price ceiling. Price ceilings are often imposed to necessities like food and energy supplies when they become unaffordable for average customers.

Price ceiling are typically established by law. In essence, a price cap is a form of pricing control. The Price caps can be useful for making necessities affordable, if only briefly. However, economists debate the long-term value of such a ceilings tax.

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