Question

• In the summer of 1979, our government imposed a ‘price ceiling” - or price control—on gasoline. Why did they do this? What was their goal? 2. What went wrong, exactly? 3. Often, when the price of a product or service is held “too low”, a shortage develops and ‘FOUR ALTERNATIVE FORMS OF ALLOCATION’ must step in to take the place of the price system (the ‘highest bidder’ system). What are these four alternative methods? Please describe each one. 4. Which one of these four methods, in your opinion, may impose the GREATEST HARM upon our society and our economy? Why? Please give an example, perhaps one that discusses how some people are responding to the pandemic.

Answer 1

1) price ceiling refers to the maximum price government charge on a product in order to protect the ultimate consumers. There is chance to hike in price on gasoline in summer season. In summer season there will be an increase in demand for gasoline products. thus for making use of this increased demand the suppliers rise the price immediately. In such situation the intervention of government in the market is very important to maintain a price stability in the market. Otherwise it adversely affect the poor consumers. as we know if there is a rise in price the price of almost all the essential products also increases. Because for Transportation of goods from one Plax to another petrol and diesel is needed. The main aim or objective of government behind this price ceiling is to make all the market factors under control.

2) It is known that price cling will gradually result in shortage of goods. Always the price ceiling is set below the equilibrium price which lead to rise in quantity demanded. this is why we say price ceiling creates shortage of goods and services. The main reason for implementing price control measure is to stabilized the market in summer season. In summer season there will be a huge rise in demand for all the products. This is exactly the reason for government to exactly. It is the responsibility of government to control the inflation and deflation that occurs in the market. there are mainly two methods to control the market. that is price ceiling and floor price. the main difference between these two is that price ceiling is to protect consumers and the other is to protect suppliers. Here the government implemented price ceiling to protect consumers from exploitation of suppliers.

3) We must step into strategical move when the shortage of a product or service occurs in the market.

** The suppliers should schedule the production process in a proper manner.

The suppliers of essential goods need to chart their production schedule concordance with the requirement of consumers. They should ensure that there will be no shortage of the product in future.

** provide goods to public on the basis of bidding.

The producers can offer goods through the process of bidding in order to avoid a market clash. allot the goods to the person who bid for the highest. If there is only least availability of products they can follow this technique.

** The availability must take all the precautions for eliminating the entrepreneur that may occur in the future.

Uncertainties is an uncontrollable factor in market. what ever may be the Uncertainties taken by the producer. there will be some unpredictable factors which affect the market. precaution the Even though must frequently monitor the beats of a market to avoid the uncertainties to a large extent.

** In each and every day the seller must rethink about his  orders .

It is th responsibility of entrepreneur to check the correlation between production and orders made.

** Analysis the performance Analysis of the entrepreneur and try to improve it in each day.

4) day the methods mentioned above the bidding system is the one which i think that badly affect the customers. because when supplier makes system like this the poor consumer wont able to purchase goods by following these formalities using their limited income. sometimes shortage of goods occurs in the market. That time people try to purchase goods with what try have. The great example for such a situation is widespread of pandemic COVID-19 19 . At that time people of afraid of shortage of products in the market. And they rush into the market and purchased essential goods that needed in their daily life.