Specific goods actually have legal prices for their maximum and minimum. Most likely, the government in the free market decides the scale of the price. The implementation of price control is in the form of direct implementation for the government to interfere with the economy. The purpose is that it could manage the affordability of the goods. Most goods gaining this intervention cover gasoline, energy, and food. However, it does not always mean that the government could ensure affordability.
In some cases, price controls trigger market disruptions.
This covers losing producers as well as noticeable change in quality. The term and scale of price control commonly refers to a form of government-mandated economic intervention. The government steers the nation’s economy through market and price control. The most common reason is to make prices of goods affordable. But in severe cases, the government would launch restrictions to deal with inflation. However, this is to note that price controls are different from market forces. Market forces are on the other hand, the act of producers to deal with supply and demand.
Sometimes price controls have minimum intervention in consumer staples. By definition, consumer staples are customers’ basic and essential products. It means that no matter how hard the financial conditions are, the customers would be unwilling to cut their budget for essential products. The epitomes of the products are like food and energy. Gasoline price in the U.S. for instance is capped. Government could impose minimums or maximums. Price caps here means price ceilings and minimum prices means price floors.
Price ceiling is another term for the maximum amount of price a seller could change. Price floor on the other hand could have two meanings. The first is the lowest acceptance limit and the second is the agreed rate at a lower range.
