Question

Apply microeconomic concepts Government Price Control and Economic Efficiency to an original real-life example. The example must clearly describe a real-life situation and explain how the economic concept(s) applies to the situation. must be between 70-150 words.

Answer 1

Government price control leading to Economic effeciency:

Introduction-

These are done by the government in form by fixing maximum or minimum price for goods wherein aiming to achieve economic effiency by getting more surplus by reducing the cost

These can be as price ceilings i.e. setting maximum price or price floors i.e. setting minimum price

Real life example-

Let's take Example of NEW YORK RENTS , the focus is not to give the needed supply to the public at larger rather state REDUCES THE OVERALL SUPPLY of housing, making rents also very high and always pushing the rents high

I.e. the Price ceiling policy adopted ,as lesser space as such will be used with lesser land coming under residential area as affordablility goes beyond normal pockets ,more the free area other development can be done on it.