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In: Economics

"Explain why economists usually oppose controls on prices

"Explain why economists usually oppose controls on prices

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Expert Solution

There are several concerns over price controls. basically the price control measures such as price floors and price ceilings are imposed in the market to benefit a particular side of the market. Price ceiling is imposed as a maximum limit on price in order to make a particular product affordable for consumers. Price floor is imposed as a minimum limit on the price in order to help the manufacturers receiving a higher price greater than the market.

the problem with price control measures is that they are inefficient and the decrease the consumer surplus and / or producer surplus in the market there by creating that weight loss.. price ceiling also results in the creation of black markets. Government has to spend money in providing support to manufacturers when it uses price control measures. Rationing of product done under price ceiling has its own opportunity cost. Due to all these reasons price control measures are considered inefficient.

Rahul Sunny answered 6 months ago
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