why does government impose price ceiling and price floor on certain commodities? who are the beneficaries of both
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Answer:
Description: Government imposes a price ceiling to control the maximum prices that can be charged by suppliers for the commodity. This is done to make commodities affordable to the general public. However, prolonged application of a price ceiling can lead to black marketing and unrest in the supply side.
Explanation: Price ceiling helps to keep a price from rising above a certain level. It controls the maximum prices that can be charged by suppliers for a given community. This is beneficial to the general public (consumers), because it helps in ensuring that given commodity is affordable. Price floor helps in keeping the price from falling below a given level. Beneficiaries in this case are producers. The government enters the market and buys up the product,hence adding on demand which helps in keeping prices higher than they would otherwise be.