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

The concept of price floor is that the government sets the minimum price that would be charged by the producer on a particular good.

Price ceilingis the concept where government sets the maximum price to be charged by the producer for a good from the consumer.

In today's scenario where producers feel like charging whatever they want or some people nagging about the prices, the concept of price ceiling and price floor seems to be very accurate. Price floors and Price ceilings can be effective in managing the economy of the country as it helps in regulating the prices of different commodities and demand and supply of various types and class of goods.

Consumers get what they want at the reasonable price and producers are able to sell what they produce making a decent amount of profit. The best example of this could be the on going situation of Covid-19. In India, when the pandemic hit, prices of sanitizers increased considerably. It were selling at the very high price and to protect the interest of consumers and as well as prodcuers, the government set the price ceiling on the price of santizers available in different sizes. Because of this, customers were able to purchase what they needed at fair price and sellers were not able to harass the market and still make money.

The best example of Price floor is the minimum wage rate that the Indian government has set. IT has set the minimum wages that would be paid to the labours and working class in different professions. It protected the interests of work force and also made things easier for the employer.