Q7. THINK LIKE AN ECONOMIST Can you think of at least one good reason that perhaps government should not interfere in market shortages with price-gouging laws? Your response should be 100 words or less.
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Government intervention is the term used to describe the steps taken by the government to control or affect economic activity in order to further specific policy goals. Laws, rules, taxes, subsidies, tariffs, and direct supply of products and services are only a few examples of the various ways that the government might intervene.
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- . Explain why economists usually oppose price controlDuring natural disasters such as the flooding in Burma one policy choice is to do nothing, i.e. let prices rise and fall according to increases and decreases in supply and demand. A second policy choice is to interfere in the market, regulate prices, and prevent the price of goods such as corrugated steel roofing, gasoline, nails, water, food, etc. from rising. The argument frequently made to justify regulating prices is that owners of scarce goods are taking advantage of people in need----taking advantage of innocent people's misfortunes to steal their money and enrich themselves. This is immoral behaviour and should not be allowed. This second policy usually includes a reliance on government rather than the free market to bring in supplies of scarce goods and distribute them for free or at below market prices to alleviate shortages.Explain why economists usually oppose controls on prices.
- In Country Faraway, cigarettes are forbidden, so people trade cigarettes in a black market. The cigarette demand is QD = 12 − P , and the cigarette supply is Qs = 2P . Find the equilibrium price and quantity in the black market. The government becomes aware of the black market and reinforces the police so that half of the cigarette supply would be seized and destroyed. Under this circumstance, what are the demand and supply functions? What is the new equilibrium price and quantity? Show the change by using a supply and demand diagram.There has been a great deal of movement of physicians across borders within the European Union, and this migration has raised concerns about patient safety and quality of care. Some member states havegoods and services and in sharp spikes in product prices. Governments may respond to public outcries against dramatically higher prices by imposing price ceilings to lower product prices or to keep them from rising too high. What effect would such a binding price ceiling have? Who would benefit from this policy, and who would be harmed?What are the possible reasons why the government may make a market intervention? What are the possible implications of such interventions? How might the wedge between consumers and firms lead to market distortions?
- Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market? a. To promote efficiency b. To protect an industry from foreign competition c. To enforce property rights d. To promote equalityGive an example not in the text of how price ceilings can lead to a shortage.If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now
- Suppose the demand and supply of firearms in Jail are given as follows: Demand: P = 630 − 349Q Supply: P = 480 + 2Q in which Q is the quantity of firearms in million units and P is the price per each firearm in Jalian dollars. a. The equilibrium price is [ANS1] Jalian dollars and the equilibrium quantity is [ANS2] million units. b. Suppose the government purchases 10 million units of firearms back from the market. After the government enters the market, on the new demand curve, when the price is 555 Jalian dollars, the total quantity demanded is [ANS3] million units of firearms. c. Suppose the government wants to use such buyback program to reduce the quantity of firearms in the community to zero. The government will need to buy at least [ANS4] million units of firearms from the market and spend at least [ANS5] million dollars. d. Suppose the government wants to use taxation to reduce the quantity of firearms in the community to zero. The government will need to impose a…If the government want to implement the price control mechanism, explain the machanism when the price set at RM3 and RM5 respectivelyMarkets fail, so there could not be a total reliance on the market forces. The government has to intervene, which gives rise to what i0s referred to as a --------------------- economy
