Think of this assignment as a debate. Your reading on the topic of price controls should allow you to have some insights on certain situations that could emerge under stressful conditions. Imagine that a natural disaster struck a certain area of the country or a pandemic. Immediately basic goods such as water, toilet paper, gasoline, food, and others became “scarce.” These goods are only available for sale at exorbitant prices. The local government, in an effort to protect its citizens, has determined that these basic goods will be subject to strict price controls and anybody attempting to sell these goods at above stipulated prices will be jailed for a minimum of 10 years. It seems unfair for some to gain at the expense of others.
Debate your position regarding these issues.
(1) Why should or shouldn’t a government implement a price control in this type of situation?
(2) Should in midst of disaster a seller be allowed to sell without price ceiling? Why or why not (based on economics theories we learn in the class)?
(3) Who gains and who loses when exchanges outside of the price control system take place?
(4) Would you be entrepreneurial and take a risk despite the penalties associated? If you would, under which economic conditions? If you would not, under which economic conditions
(5) Does price control in this type of situation lead to efficient use of the basic resources? Or does it lead to a different goal? Why or why not? Which economic goals should be the goal of that affected area? Why?
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