Price Control Strategy Mathematics & Economics Essay (Essay Sample)

Price Control Strategy
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Surplus and Shortages of commodities and services are ordinarily short-term as their respective market prices adjust to balance the quantity demanded and quantity supplied. However, in some markets, the government is forced to intervene and regulate the prices of certain commodities to enable a balanced supply and demand equilibrium (Rittenberg& Tregarthen, 2018). In this case, the market studied is the agricultural market that is used to examine the impact of price control.
In the agricultural sector, price floors is a systematic price control routine where the Government sets up the measure to protect the farmers in the agricultural markets from price fluctuations. Such is done by setting a minimum allowable price above the price equilibrium; this prohibits price below the minimum amount set and significantly results in a surplus of commodities in the market (Musselli, 2017).