What role should our government play in Price Ceilings and a Price Floors?
Read through some of these sites and then decide.
http://www.google.com/#q=price+ceiling+and+a+price+floor+government
The role of the government in price ceilings and price floors is to intervene in the market to address situations where prices are perceived to be too high (price ceiling) or too low (price floor). The government aims to regulate prices to create certain outcomes or address economic imbalances.
When it comes to price ceilings, the government sets a maximum price for a good or service that can be charged by sellers. This is typically done to protect consumers from excessively high prices, especially during times of emergency or shortages. For example, in response to natural disasters or other emergencies, the government may impose price ceilings on essential goods such as food, water, or fuel. The goal is to ensure that these goods remain affordable and accessible to all.
To determine the price ceiling, the government would typically assess the market conditions, such as supply and demand, production costs, and the fair value of the goods or services. The government can enforce the price ceiling by implementing regulations and penalties for violators. This can involve monitoring prices, empowering regulatory agencies, and providing mechanisms for consumers to report any price-gouging.
On the other hand, price floors involve setting a minimum price for a particular good or service. The purpose of price floors is usually to protect producers or workers from extremely low prices that could lead to financial hardship or exploitation. For example, the government may set a minimum wage to ensure that workers receive a fair income that covers their basic needs.
To establish a price floor, the government needs to consider factors such as production costs, fair compensation, and the impact on market equilibrium. The government can enforce the price floor through legislation or regulations, imposing penalties for violators, and monitoring compliance.
Overall, the government's role in price ceilings and price floors is to balance the interests of consumers, producers, and workers. It aims to prevent market failures, protect vulnerable groups, and maintain stability in the economy. The specific level of government involvement and the effectiveness of these policies can vary depending on the context and specific objectives of each situation.