Explain the circumstances under which price control is considered necessary.

Explain the circumstances under which price control is considered necessary.

The government controls prices in order to:
1. Stabilize prices and supplies of essential commodities
2. Reduce income inequalities by balancing welfare through imposition of minimum wages
3. Control the exploitative/ unscrupulous practices of natural monopolies and or those created by government policies.
4. Promote self-sufficiency in domestic production of goods and services.
5. Direct investment by increasing relative profitability while restricting competitors because any prices, other than the legislated prices, are not allowed.
6. Protect the purchasing power of consumers especially the low-income earners.
7. Protect domestic industries against the highly competitive foreign influence-the infant
industry argument.
8. Generate a conducive and selective political support base- industrial peace, minimal or
absence of food riots and other forms of insecurity.

---

Wilfykil answered the question on February 4, 2019 at 11:37

Exams With Marking Schemes

• Grade 1
• Grade 2
• Grade 3
• Grade 4
• Grade 5
• Grade 6
• Grade 7
• Grade 8
• Grade 9
• PP1
• PP2
• Playgroup
• Form 1
• Form 2
• Form 3
• Form 4

Related Questions

• Using the following demand and supply functions of a commodity x, Qd = 100 - 2P Qs = 40 + 4P use diagrams to illustrate and explain the... (Solved)
  

  Using the following demand and supply functions of a commodity x,
  Qd = 100 - 2P
  Qs = 40 + 4P
  use diagrams to illustrate and explain the effects on the values from:
  1. A fall in price of x's substitute
  2. A simultaneous increase in input prices and a rise in the consumer's income
  Ceteris paribus.

  Date posted: February 4, 2019 .    Answers (1)

• Using the following demand and supply functions of a commodity x, compute the equilibrium price and quantity. Qd = 100 - 2P Qs = 40 + 4P (Solved)
  

  Using the following demand and supply functions of a commodity x, compute the equilibrium price and
  quantity.
  Qd = 100 - 2P
  Qs = 40 + 4P

  Date posted: February 4, 2019 .    Answers (1)

• Clearly explain the distinction between supply, demand and equilibrium price. (Solved)
  

  Clearly explain the distinction between supply, demand and equilibrium price.

  Date posted: February 4, 2019 .    Answers (1)

• What factors limit consumer sovereignty? (Solved)
  

  What factors limit consumer sovereignty?

  Date posted: February 4, 2019 .    Answers (1)

• Using specific examples, explain "Ceteris Paribus" as used in economics (Solved)
  

  Using specific examples, explain „Ceteris Paribus‟ as used in economics

  Date posted: February 4, 2019 .    Answers (1)