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Government Intervention - Coggle Diagram

- - - - It is imposed to prevent suppliers from exploiting consumers by charging exorbitant prices during times of shortage
    - - It is imposed to keep the prices of essential goods affordable. For example, the Indonesian government imposed price ceilings on 13 food items from the food market in conjunction with the Christmas holiday. the price regulations took effect for 5 days between 23 and 27 December and included food items such as live chicken, imported turkey, tomatoes and capsicums.
    - - It is imposed to restrict or discourage the production of some goods in order to free up resources for other uses. during times of war, the government may choose to imposed price ceilings on some goods to shift resources out of the industry to the production of weapons, supplies and equipment to support the military troops
  - - - The black market is place where goods are resold illegally above the ceiling price. when a price ceiling is imposed a black market can form because unsuccessful buyers will be willing to buy the good at the much higher prices. assuming all the available supply is sold at the controlled price, a black marketeer will sell the good at the maximum price consumers are willing to pay, thus they make profit.
  - - - People will have to queue up to buy the good, resulting in long lines and waiting lists. people who are late may not be able to buy any of the good
    - - Sellers can choose to whom they want to sell it to, they can choose to sell only to close friends and associates, to sell under the counter or through tie in sales
    - - the government can choose to distribute the good to match the availability in supply of the good, the can distribute it according to family size, age or any other criterion
    - - Distirbuted at random to various individuals
- - - - It is imposed to prevent exploitation of workers by employers in the labour market
    - - Price floor supports the prices of goods, and hence supports the income of producers at a much higher level than at the equilibrium price. For example, UK and US governments imposed price floors on agricultural goods to increase the income of farmers.
  - - - The government can buy up the surplus, but this is only feasible if the good is non-perishable
    - - The surplus can be destroyed or gotten rid of
    - - The surplus can be dumped in other countries, and it refers to the selling of the good at prices below the marginal cost of production
    - - For example, a surplus of milk can be diverted to cheese production