Why does a government place price ceilings, such as rent control, on some "essential" goods?
C. am I right?
A. to prevent the development of a black market
B. toencourage an increase in supply of necessary items
C. to limit the impact of equilibrium pricing
D. to help reduce demand for these goods
Sure, Why not,
C. to limit the impact of equilibrium pricing
C. to limit the impact of equilibrium pricing
To confirm if this answer is right, let's break down the options and analyze them:
A. to prevent the development of a black market - This option suggests that price ceilings are implemented to prevent the development of a black market. While preventing the black market can be a potential reason for price ceilings, it is not the primary reason for implementing them.
B. to encourage an increase in the supply of necessary items - This option suggests that price ceilings are put in place to encourage an increase in the supply of necessary items. While price ceilings can incentivize suppliers to produce more of the goods, this is not the main purpose of price ceilings.
C. to limit the impact of equilibrium pricing - This option states that price ceilings are used to limit the impact of equilibrium pricing. This option is correct. Price ceilings are typically used to prevent prices from rising too high, particularly for essential goods, to ensure affordability for consumers. By limiting the impact of equilibrium pricing, governments aim to prevent exploitation and excessive costs for consumers.
D. to help reduce demand for these goods - This option suggests that price ceilings are implemented to reduce demand for these goods. While price ceilings can potentially reduce demand by making the goods more affordable, this is not the primary reason for implementing them.
Therefore, the correct answer is C. to limit the impact of equilibrium pricing.