Answered: If people can't afford the equilibrium…

If people can't afford the equilibrium price for a good, would it be a good idea for the government to force the producer to produce it and give it to the poor people? Why or why not?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 7SQ

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If people can't afford the equilibrium price for a good, would it be a good idea for the government to force the producer to produce it and give it to the poor people? Why or why not?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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Based on your opinion, and what was discussed in the textbook, do you think it makes sense for the government to alter prices in a market using price ceilings (such as rent control) and price floors (such as minimum wage or maintaining a high price for agricultural products
Is introducing a minimum price a better way of reducing consumption than trying to change peoples’ attitudes?
Why might producers argue for a price floor if it ends up making society worse off?
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When the price is above the equilibrium, how do market forces move the market price to equilibrium. When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to raise prices. When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to lower prices. The government directs companies to lower their price to clear unused inventory When price is above the equilibrium, there will be more buyers than sellers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to maintain their prices and wait.
What are three reasons that a government might want to intervene in markets?
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