Write a note on price control system.
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Answers
Answer:
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Explanation:
Price controls are government-mandated minimum or maximum prices set for specific goods and are typically put in place to manage the affordability of the goods. ... Over the long term, price controls can lead to problems such as shortages, rationing, inferior product quality, and black markets.
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QUESTION
Write a note on price control system?
ANSWER
Price controls are government-mandated legal minimum or maximum prices set for specified goods. They are usually implemented as a means of direct economic intervention to manage the affordability of certain goods.
- Price controls are government-mandated minimum or maximum prices set for specific goods and are typically put in place to manage the affordability of the goods.
- At best, price controls are only effective on an extremely short-term basis.
- Over the long term, price controls can lead to problems such as shortages, rationing, inferior product quality, and black markets.
- Over the long term, price controls inevitably lead to problems such as shortages, rationing, deterioration of product quality, and black markets that arise to supply the price-controlled goods through unofficial channels.
Examples in the United States are the price controls set on gasoline during the Nixon administration, which eventually led to major shortages in supply and long, slow lines at gas pumps.
Example of Price Controls
Rent control is another frequently cited example of the ineffectiveness of price controls. Rent-control policies widely implemented in New York City were intended to help maintain an adequate supply of affordable housing. However, the actual effect has been to reduce the overall supply of available rental space, which in turn has contributed (among other factors) to even higher prices in the market of available rental housing.
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