Homework Help is Here – Start Your Trial Now!
Business
Economics
Using an appropriate diagram, explain the impact of the imposition of ceiling price on oil prices towards the market equilibrium.

Using an appropriate diagram, explain the impact of the imposition of ceiling price on oil prices towards the market equilibrium.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 2PA
See similar textbooks
icon
Related questions
Question
Johari: Govt to consider ceiling for oil price KUALA LUMPUR: The setting of a ceiling is one of the options the government is considering to tackle the issue of escalating oil price. Second Finance Minister Datuk Seri Johari Abdul Ghani said in certain advanced countries, the governments would leave oil prices afloat, and the oil and gas (O&G) industry players would determine them. "It is up to the government to set a ceiling which is deemed fair for all. "When we (the government) have decided on the ceiling price, whether they (O&G industry players) want to sell the oil at lower prices for promotional purposes, we leave it to them. This is one of the options we are looking at," he said. He said the government has also to be mindful whether the policy would be a problem for those living outside the city. "We are afraid the industry players would pay more attention in obtaining revenue from consumers in the city, and don't want to do the same for those in the outskirts. We have to be wary of this too," he said. On the reintroduction of fuel subsidies, Johari said, it would not be good for the Malaysian economy and were not sustainable. "We are aware of the oil prices. We will monitor them. If they keep on increasing and if there is additional revenue, I think the government can consider a different form of assistance to the lower groups, but not those who are well-off," he said. He said the government would come out with a mechanism. "However, as of now there isn't a formula yet, but the government has already decided that it can't reverse this (subsidy) policy.". Adapted from New Straits Times, Thursday Feb 9th, 2017. Using an appropriate diagram, explain the impact of the imposition of ceiling price on oil prices towards the market equilibrium.
Transcribed Image Text:Johari: Govt to consider ceiling for oil price KUALA LUMPUR: The setting of a ceiling is one of the options the government is considering to tackle the issue of escalating oil price. Second Finance Minister Datuk Seri Johari Abdul Ghani said in certain advanced countries, the governments would leave oil prices afloat, and the oil and gas (O&G) industry players would determine them. "It is up to the government to set a ceiling which is deemed fair for all. "When we (the government) have decided on the ceiling price, whether they (O&G industry players) want to sell the oil at lower prices for promotional purposes, we leave it to them. This is one of the options we are looking at," he said. He said the government has also to be mindful whether the policy would be a problem for those living outside the city. "We are afraid the industry players would pay more attention in obtaining revenue from consumers in the city, and don't want to do the same for those in the outskirts. We have to be wary of this too," he said. On the reintroduction of fuel subsidies, Johari said, it would not be good for the Malaysian economy and were not sustainable. "We are aware of the oil prices. We will monitor them. If they keep on increasing and if there is additional revenue, I think the government can consider a different form of assistance to the lower groups, but not those who are well-off," he said. He said the government would come out with a mechanism. "However, as of now there isn't a formula yet, but the government has already decided that it can't reverse this (subsidy) policy.". Adapted from New Straits Times, Thursday Feb 9th, 2017. Using an appropriate diagram, explain the impact of the imposition of ceiling price on oil prices towards the market equilibrium.
Expert Solution
steps

Step by step

Solved in 3 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Price Control
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS