Market Equilibrium
When markets are free
to choose a price and quantity, then the result will be an equilibrium. If, in
the opinion of government decision makers, the resulting for the equilibrium
price is too high or too low, then the government may intervene to the market
by imposing price controls. Government will decide exactly how high is too high
or how far a price can fall before it’s too low for a product.
Price Ceiling
Price controls are important because they can alter the behavior within a market. For example, if government is think that the price for a product is too high then they will set a price ceiling and restrict the price from rising above the point of price ceiling. The government sets the price ceilings as a way to protect consumers. The price ceiling is the maximum price that can be charged for a good.
The Price Ceiling set on Petrol
Petrol
is a key factor in household budgets and transport industry costs and rising
prices can severely damage economic activity. In general, the higher crude oil
price will cause the petrol price increasing. The price of the premium RON97
petrol in Malaysia went up 10sen to RM2.90. It make consumer who has the low
income feel troublesome and no have ability to bear it. Consumer had complaint
it and requirement to the government. In order to make people
spend more cash
in hand, help to
stimulate economic growth and activity so the government has set the ceiling price
for petrol to RM 2.70 per liter.
In my opinion, I strongly agree that government should set the ceiling price on petrol because it is useful. Why it is important???
Because: 1.) Petrol is used as fuels in car / vehicle.
Nice blog with good explanation and appropriate examples,this helps me a lot for my studies,thanks :D
ReplyDeleteThank you, hope this information will help you in your studies.=)
ReplyDeletethx for the nice information , it has help me to more understand about the price ceiling .
ReplyDeleteYou are welcome.=)
DeleteHave good explaination with appropriate examples and more easy to understand... :)
ReplyDeleteThank you.I wish it is helpful to you....=)
DeleteThank you for sharing this knowledgeable information.
ReplyDeleteThis is useful for me in my study.
you're welcome, you can ask question any time if u are not understand about price ceiling.
DeleteGreat elaboration on topics with the help of diagrams n pictures which give better explanation to readers. Thank for sharing..=)
ReplyDeleteWelcome... Enjoy it...=)hope it is helpful for you~
Deletecan i ask a question?
ReplyDeleteIs it the goverment can set the price ceiling in any point they like?
Hihi...sure you can ask any question here and I would like to answer you question now.=)
Deleteanswer is No, government will set the price ceiling is to protect the consumer so the point must set below the equilibrium price. If it is set above the equilibrium price it has no effect but if the price ceiling is set below the equilibrium,then it has powerful effects.