Explain the effects of Price ceiling?
Answers
maximum price legislation is made by the government to improve the welfare of the people, some people, in the process, gain, while some lose. Producers may lose as they are supposed to accept lower prices. T
his may force some producers not to produce the commodity. Further, some consumers lose, but not all; some consumers who can purchase the good at a lower price stand to gain, but those who have been ‘rationed out’ and cannot afford to buy the good at all stand to lose.
Now, sellers would devise various policies to allocate OQ1 among the buyers. Firstly, sellers may adopt a democratic principle of distribution i.e., the principle of ‘first-come, first-served’. Secondly, sellers may hoard it ‘under the counter’ and distribute it only to the favoured customers or friends. Naturally, these allocational principles would certainly put some of the buyers in a disadvantageous..
Answer:
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