Price Control

Improved Essays
How ceiling price influence economy Price control is a big thing in our daily life, and it affects everyone. From the necessary products to the luxury product, everything can have price control. Normally, the market can control by itself, as a certain demand can match a certain supply to let the product have a biggest profit and let the consumer benefit because the consumer surplus is maximum. However, the market price may be too low or too high, the government will have to show up control prices, such as the floor price and ceiling price. And sometimes the price control may work and have a benefit for the product market when the government use it in a right way, but sometimes it may also causes the opposite effect in the market even causes …show more content…
China has the largest population in the world, and for the problem for people’s basic life involve in their salary. The government tried to help the low income people by increasing the floor price for their salary. From 2011 to 2014, the standard of the floor price salary increased every year, but when they compare to the rate of this increase, it was diminishing. Now, the problem is whether this measure does help them? And is this active good for economy? According to Professor Shuang Ma, who is a professor in Southwestern University of Finance and Economics, with the implement of floor price, government protect labor’s lowest earner, contain the basic life, adjust the distribution ratio of cost and labors, and reduce the difference between labor’s salary. However, it also may cause the bad influence. In order to implement the floor price, the most direct influence is the companies. Their cost will increase when it floor price increase, so if the firms don’t want to increase a lot their cost, they may reduce some of the labor. In this situation, it leads to another problem, the problem of occupation. The unemployment increased. The government wants to help them to increase the floor price of salary, but it also may make them lose their job. As this measure active in many different countries, Ruixiang, Fu who is …show more content…
They also found out that in general, when the floor price increases 10%, the occupation will decrease about 1%, and this influence would be different from the low salary enterprise and the high salary enterprise. In the low salary enterprise, when the floor price increases 10%, the occupation will decrease 1.8%, and in the high salary enterprise, when the floor price increases 10%, the occupation will decrease 0.6% (Prakash,

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