4.-8. Price ceilings, in the form of rent ceiling, or price floor, in the form o

Question

4.-8. Price ceilings, in the form of rent ceiling, or price floor, in the form of minimum wage, appear to be good initiatives from the government to promote the welfare (well-being) of all. Explain how these price ceilings and price floor work and what they are intended to accomplish. Discuss the possible benefits or drawbacks of these policies. For this question, you need to write a good short essay of 12 to 15 sentences. Make sure to write logical sentences that flow very well: good sentence structure, good grammar, good punctuation; etc.), and to get full credit, you also need to include a list of your sources (references). For some of these questions you do not have to go very far, the information may be readily accessible in the textbook we use for this class (12 points).

Explanation / Answer

Rent ceiling and price floor are the two initiatives taken by the government so that the common interest of larger population can be protected.

Price ceiling can be seen as a situation where the government decides the upper limit of prices which can be charged from any customer or the individual. Any price which is charged above he price ceiling decided by the government will be illegal and legal actions can be taken. This policy is adopted in order to make sure those producers and sellers do not capitalize or exploit the financial benefits of the common consumer. This helps the common public to pay only those prices which includes the normal profit with the cost. If these price ceiling is not imposed, then the producers and sellers can create the artificial shortage of products and increase the price of the products to earn the maximum amount of profit and thereby resulting in the financial losses of the customers.

On the other hand, price flooring is established to ensure that the prices for the work done by the labor is not decided below the certain specified range. If the wages are paid below the decided level, the legal actions are bound to be taken. This is again established to make sure that no labor is exploited by the employers. The minimum wages are decided on the basis of the cost of living, standards of living, skill level and various other factors.

References:-

Rent Control. (n.d.). Retrieved December 03, 2017, from econlib/library/Enc/RentControl

Taylor, B. (n.d.). Economics.fundamentalfinance. Retrieved December 03, 2017, from heconomics.fundamentalfinance/micro_price-floor

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.