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Essay on Government Intervention on the Market Set

Project id 1004006
Subject area Self Improvement
Document type Essay
Words 3373
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Government Intervention in the Market Place The government may opt to set prices distinct to those set by the economies. Prices are not permitted to fall below a certain minimum. For example, in Agriculture, authorities may decide to subsidies farmers, set production quotas or offer price supports. Government may choose to set cost ceilings or price floors. The government may also choose to increase or decrease taxes on particular commodities. In this essay, we will look at the effects of government intervention in a economic perspective. According to the Financial Mail (2006) In February this year, inflation rate in Zimbabwe reached the highest degree in the world -- an annual 782%. It is estimated that at the end of this month, Zimbabwe's year-to-year inflation rate will have topped 1 000% that is based on calculations from the regionally represented Imara financial-services group (Mail and Guardian, 2006). As inflation increases to ridiculous rates, the Zimbabwean government is forced to offer some type of relief for the people. Costs of basic commodities like gas and food are climbing sharply on an almost day to day occasion while salaries have remained rather the same (Fiscal mail, 2006). Because of people or rather social issues, the government was made to set price controls for basic commodities such as gas, food and transportation costs. "A price ceiling is a law which makes it illegal to charge a price higher than a specified level" (Parkin et al., 2006:119). The Zimbabwean government has tried to set a price ceiling for certain commodities i.e. food and gas. This means that suppliers can't set prices higher than the stipulated price. For a cost ceiling to be effective based on Parkin et.

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