The Dark Side Of Price Controls Essay

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.

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

Sports teams are switching to a variable-pricing strategy for tickets so that they can get a higher profit on games with record attendance numbers. They feel the need to do so because the marginal costs, such as construction payment and players’ salaries, did not equal to the marginal revenue, since attendance was severely dropping. To pay for the marginal cost, the sports team needed to capitalize on things that they were sure of, like increasing attendances to games between major sporting rivals.

Product market is a mechanism that allows people to easily buy and sell products. The interaction between product and factor markets involves the principle of derived demand. Derived demand refers to the demand for productive resources, which is derived from the demand for final goods and services or output. Firms obtain the inputs or factors of production in the factors markets. The goods are sold in the products markets. In most respects these markets are the same. Price is determined by the interaction of supply and demand, firm's attempt to maximize profits, factors can influence and change the equilibrium price and quantities bought and sold and the laws of supply and demand hold. Consumers (households), in pursuit of their self-interest, have the incentive to look for lower prices. An incentive is the hope of reward or fear of punishment that encourages a person to behave in a certain way. Free market offer a wider variety of goods and services, and consumers in essence decide what gets produced which is called consumer sovereignty.

The recent Time Magazine article "Post-Sandy Price Gouging: Economically Sound, Ethically Dubious," evaluates the recent price gouging by businesses during Hurricane Sandy (Futrelle). Examples of price gouging include raising prices on batteries and gas to astronomic levels, with the knowledge that the captive public audience will purchase the products regardless of the price. Businesses that have raised prices include bodegas, supermarkets and gas stations. Although such price gouging is undeniably an economically profitable business measure, the article argues that it is ethically dubious since it takes advantage of the public.

This delicate subject is affecting millions Venezuelan citizens as well as raising concerns of family members abroad fearing for their kin. It has affected generations so much that many have decided to leave behind jobs, friends and family to flee from its own country. Venezuela is one of the most dangerous countries at present, a dangerous country where “economic crises and high inflation, like panic-induced runs on banks, generate self-serving, defensive behaviors that tend to spiral out of control,” (Corrales, 15). Venezuelan citizens are having a really difficult time realizing how bad their country is doing and how their families are trying to survive day by day.

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)

Recent medical advances have greatly enhanced the ability to successfully transplant organs and tissue. Forty-five years ago the first successful kidney transplant was performed in the United States, followed twenty years later by the first heart transplant. Statistics from the United Network for Organ Sharing (ONOS) indicate that in 1998 a total of 20,961 transplants were performed in the United States. Although the number of transplants has risen sharply in recent years, the demand for organs far outweighs the supply. To date, more than 65,000 people are on the national organ transplant waiting list and about 4,000 of them will die this year- about 11 every day- while waiting for a chance to extend their life through organ donation

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.

The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the

But then, he caused the economy to collapse. In an state run oil company, PVSDA, many workers went on strike. In 2012, an oil refinery exploded killing 40 and losing 1.7 billion dollars. Also,;Hugo Chavez ordered the military to restore order and instead the military arrested him and installed an interim leader. There were countless protests against Hugo Chavez from citizens. All of these contributed to the economy crashing. After President Nicolás Maduro took over, he kept printing more money to pay for subsidies and welfare programs causing inflation. The inflation rate is now at 720% making currency practically worthless. This causes children to have to work to fix the economy and fund their families. Workers then even abduct children and force them to work. Some of them even prefer males over females to do work even leading to sexual

Venezuela’s progress is only behind Cuba, Hong Kong in index, based on education, health, and life expectancy. According to the United Nations Economic Commission for Latin America, Venezuela’s poverty rate was 48.6 percent in 2002 and it diminish to 29.5 percent in 2011. The country got a 7.5 life satisfaction rate out of ten, making it higher than the global average which is 5.5 (est. 2012). Out all the countries in the Caribbean and Latin America, Venezuela has the lowest income inequality rate and the smallest gap between the rich and poor. However Venezuela’s crime and inflation have risen since 1999. The oil output has dropped by thirteen percent and the food and power shortage have risen. Murders touched a record high of 58 per day during the first months of 2013. Venezuela topped the list of most dangerous country in Latin America, and is in the top four for most vicious countries in the world. The government even refused to release their own homicide stats for the year, but the NGO (Venezuela Observatory on Violence) estimated that 24k people were murdered only in 2013. The homicide rate rose 14% from 2012-2013. Venezuela is a country where the vast majority of the population has a gun, there is roughly a gun for every two people in a country with 29 million people.

Now it must be mentioned that Maduro, instead of changing tack upon the death of Chavez, doubled-down on the latter’s policies and, in many cases, initiated economic policies that have further exasperated the crisis. As a result of having depleting government reserves, Maduro slashed imports including basic good like groceries and medical supplies – this was done in order to avoid having to default on foreign debt. Moreover, Maduro also made the grave mistake of responding to the impending crisis by printing money, which has caused inflation to skyrocket and exasperated the situation even further by making basic goods unaffordable. These policies coupled together have led to food shortages which have even led to food riots. While the economic policies of Chavez created the current crisis, those of Maduro has made the crisis far worse. The two men, quite simply, personified economic populism, relying on “the creation of a material base for the public’s support and the distribution of favors to constituents,” all whilst paying little heed to financial constraints (Cordova Cazar and Lopez-Bermudez 2009,

Price had never been this low where a desktop costs only $499, whereas laptops are hovering around $1100. Yet do not forget the $500 Apple mini sub compact laptop or the Apple iBook laptop that sells for $650, and the stripped down $400 after rebate laptops companies like Gateway and eMachine are flooding the market with to make money on volume of sales instead of a high price margin. The problem is even if the price of PCs plummets the effect is not felt immediately, because people do not rush to change their PC despite the fact they are getting it cheaper, which means the PC turnover rate is low like most durable goods. That might be what is contributing to the declining of prices, as the assumption of the manufacturers might be that if the price goes low enough people might want to change their computer to avail themselves the latest add-ons. Even the add-ons themselves seem to have reached their zenith some time ago and the latest most alluring gadget that came into existence was CD/DVD RW and every reasonably priced desktop or laptop is equipped with it. However, it does not mean the makers of PCs are not coming up with new functionality, add-ons, and price reductions to woo buyers. The other recent addition was Wi Fi that got boost from the introduction of Intel 's Centrino mobile technology chip and it had added a lot to the mobility of laptops, which can access the Internet wherever hot spots are available. Other than that, the overall performance of PCs despite