Question

Do you think that the intervention by the government in implementing price ceilings or price floors is justified in today's time; why or why not? Are the consumers getting what they want; why do you believe this to be so? Are the suppliers able to sell what they produce; why do you think so?

Use an example from another country besides United States to justify your reasoning.

Answer 1

Ans.

- Price floors make surpluses by fixing the price over the balance price. At the price set by the floor, the amount provided surpasses the amount requested.

- In horticulture, price floors have made steady surpluses of a wide scope of rural items. Governments ordinarily buy the measure of the excess or force creation limitations trying to lessen the overflow.

- Price ceilings make shortages by setting the price beneath the harmony. At the ceiling price, the amount requested surpasses the amount provided.

- Lease controls are a case of a price ceiling, and hence they make shortages of rental lodging.

- It is once in a while the case that lease controls make "secondary passage" courses of action, extending from prerequisites that inhabitants lease things that they would prefer not to by and large pay-offs, that bring about rents higher than would exist without the ceiling.

- Lets take the case of India. Where even today the government intervene and provide price ceiling and floor for various sectors including agriculture so that the farmers get the good price for their crop so government fix the minimum sale price of the crop ( Price floor) and for fertilizers they fix the price ceiling so that farmers don’t have to pay high price for the inputs (price ceiling ).