Discuss whether the introduction of maximum prices by a government would solve the problem of scarcity.

Australia’s economy is much better then South Korea’s. This essay will be comparing five different areas of the economy. These include economic growth and the quality of life, employment and unemployment, distribution of income, environmental sustainability and the role the government in health care, education and social welfare. Income is a necessity to achieve higher living standards. Australia’s average household income is 31 197 USD per year, South Korea’s average household income is only 18 035 USD per year.

A price ceiling is a government-levied maximum rate for a product or good. When a price ceiling inflicted by the government is more than retail equilibrium price, the price ceiling has no effect on the market or economy. This is because it does not obstruct supply, nor does it boost the demand. A different effect transpires if the government imposes a price ceiling below the market’s equilibrium rate. The suppliers will no longer be capable of charging the price that the market mandates, but they are required to meet the maximum price determined by the government’s price ceiling. When the demand rises beyond the capability to supply, shortages ensue. This leads to rationing of the product, causing some consumers to experience longer lines to obtain the product. In a worse case, there would be no products available for the consumer to buy.

However, when the equilibrium price is beyond the expectation of a fair market value, for reasons of political or social concerns governments will intervene in the market and establish limits on such things as wages, apartment rents, electricity, or agricultural commodities. Government uses price ceilings and price floors to keep prices below or above market equilibrium. (Stone, 2012, page 68)

market, there is price competition. This can lead to price wars and, therefore, lower prices for

Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.

Price floors is a strategy that can be quite useful, with many positives outcomes from it, but also there are a few negative outcomes. The government use price floor to prevent people from buying certain products as frequently and also to decrease certain products demand. Goods such as cigarettes have a price floor, which is why the price for cigarettes will always be above equilibrium, and will only increase in price over the years. This could be considered an advantage and also a disadvantage for some. Price floor has positive outcomes especially for the government and also lowers the death/illness rate caused by smoking. A negative outcomes may affect the suppliers, due to the fact they can no longer set the price for the product, which will cause the quantity supplied to be greater than the quantity demanded, this is known as a surplus (shown in figure 4). Due to the price being constantly above equilibrium, the money that is made may be the same as previously when the price floor did not exist, or possibly more. Although price floor

The legal minimum and maximum prices for goods and services are implemented by governments, in an effort to be able to manage the economy by direct intervention. Price ceilings and price floors are two types of price controls. The legal maximum of price for a good or service is a price ceiling and the legal minimum price of good or service is the price floor. The government may impose both a price ceiling and a price floor but typically only selects one for a specific good or service. Prices are formed by a free market when there is a balance between supply and demand of the good or service. When the legal price is different than that of the market price it will create either an excess in supply or an excess in demand. When a price ceiling is imposed it will create shortages, while having no effect on the quantity supplied. Shortages of goods and services cause consumers to compete robustly over the restricted supply. The shortages arrive from suppliers limiting the supply of goods and services due to the price ceiling, not allowing them to make a profit. The opposite holds true with price floors. Having a price floor creates an excess of goods and services and that allows suppliers to be more agreeable to supply. When price ceilings or price floors are implemented, this can lead to the creation of black markets and inefficient allocation to

A price ceiling set below the equilibrium price means that the quantity supplied ____ the quantity demanded so that a ____ exists.

The price ceiling is the maximum price a seller is allowed to charge for a product or service. An impact on society includes when the prices are so high of a product, that no one can buy it. A price floor is the lowest legal price a product or service can be sold at. When market price is at its lowest, it may still be too high for consumers to purchase products. Governments can intervene for any purpose, and they are the ones who set these price controls.

Another desirable effect of economic growth is increased tax revenue, the government receives more money from tax payers with out having to increase tax rates. If people are earning more, the more money they will pay in tax, the more money companies make the more tax they must pay to the government. The more money the government gains in tax revenue the more they can do to improve the country, they can invest in transport and infrastructure, they can make improvements to health care and they may even need to employ more people further reducing unemployment.

This assessment will be an analysis of graphed data and changes in supply and demand for three economic problems. Problem A involves production possibilities for consumer and capital goods, problem B is an evaluation of changes in supply and demand equilibrium, and finally, problem C involves pricing with relevance to supply and demand. Successful completion of this assessment demonstrates proficiency in; applying theories, models, and practices of economic theory, analyzing solutions with support from relevant data, resources, references, and economic principles, analyzing graphed and circular

Raising peoples’ living levels, i.e. incomes and consumption, levels of food, medical services, education through relevant growth processes. 2. Creating

This can be measured by the following formula; Per capita nominal GDP = Nominal GDP / Population, Per capita real GDP = Real GDP / Population. Seven factors determine economic growth. Natural resources such as land, mineral deposits, waterways; climatic conditions provide an essential foundation to economic growth. Combined with the other resources of capital, labor and enterprises, natural resources can be developed and organized to increase the productive capacity if the nation. Consequently the quality and size of the labor force is a major determinant of economic growth. Education and vocational training are essential the growth potential of a nation. The promotion of education and job training schemes increase the knowledge, skills and flexibility of the workforce that contributes to potentially higher levels of productivity and efficiency. Whether from natural increase or immigration population growth can cause a higher level of economic growth. An increasing population requires increased public spending on housing, education and other social needs while businesses expectations of

The Singapore economy had proved its resilience during the worst post-war recession and experience exceptionally high economic growth during the 42 years since its independence. For the period 1966-1973, the economy expanded consistently at a double-digit growth rate in real terms (Kum Poh, 1982, p.1). Gross Domestic Product (GDP) at constant prices continues to rise at an annual rate of 8 percent till 2005. With population growth at 2.1 percent, per capita GDP increased by 5.8 percent on average each year (Gesquiere, 2007, p. 12).

In terms acceleration of economic growth is based on the measurement of GDP, MALAYSIA HAS recorded a growth of 5.1% last year. Although it is lower than 7.2% in 2010, but it was so roaring in the context of a difficult global economic environment and uncertainty. In contrast, global economic growth has dropped from 5.2% in 2010 to 3.8% in 2011 while the economy of the developed countries like USA, Germany, UK, France and Japan also recorded weak growth of respectively 1.5%, 2.7%, 1.1 %, 1.7% and -0.5% in the same year; far lower than Malaysia's achievements. Following a satisfactory GDP growth was assisted by the Federal government revenue increased by RM13.2 billion in 2011 through increased collection of IRB estimate of RM109.7 billion compared with RM96.5 billion the government has managed to reduce its fiscal deficit to 5.0% compared projection of 5.4%. This means that the GOVERNMENT has successfully steered the nation's economy as well as the control and management of public funds wisely in the past 3 years in a row when managed to bring down the fiscal deficit from 7.0% in 2009 to 5.6% (2010) and 5.0% in the past year in a expanding economy.