Prices of highly advertised brands
The frequently advertised commodities had become popular which made them leading brands and thus more expensive than other brands. Also, advertising expenses are normally exorbitant and thus the products must be sold at a higher price to reduce the effects of advertising expenses on the profit margins.
Price floors are created when commodity prices are artificial maintained above the market equilibrium prices and are prevent from falling (Baumol & Blinder, 2010). Examples of price floors are numerous in agriculture. With the development of new technologies and farming method, agricultural production has always been on the increase. Increase in commodities consequently encouraged drop in the prices of the commodities and as a result farmer could not even raise their initial invest. To protect farmers and discourage them from stopping production of food, the government set price floor to ensure that farmers can still sell their products at profitable margins.
As Mankiw (2011) notes, a price ceiling is created when prices are artificially maintained under the equilibrium price and prevented from rising. Examples of price ceilings occur in many cities through legal rent control mechanisms. This involves the government of the local authorities stipulating the maximum amount of money that can be charged by as rent. Although the amount may be allowed to rise yearly due to inflation, the maximum payable rent remains below the market equilibrium value.
Impacts of a price floor
Price floor leads to a surplus of commodities, for instance, in agriculture; it leads to a surplus of agricultural products in the market. The government and producers have to find a way of storing their surplus products (Baumol & Blinder, 2010).
Impacts of a price ceiling
Price ceilings lead to shortages in commodity supply, since very few landlords will be willing to provide facilities at a price lower than the equilibrium rent. The shortages lead to rationing challenging, since, somehow, some buyer will have to get the commodities while some will miss out. The most common method of allocation of the limited facilities/commodities is first come, first served. There will be hundreds of tenant vying for a single apartment. Landlords/sellers may choose specific tenants/buyers (Mankiw, 2011).
Price ceiling benefit buyers at the expense of sellers. Sellers shy from selling their product at lower prices and encourage black and grey markets.
Price floor achievement of its objectives
Price floor serve to encourage continued production of commodities by protecting producers such as farmers from low prices that would lead to losses. Such losses would discourage the farmer from farming (Baumol & Blinder, 2010). However, since the assurance of a stable price encourages continued production; price floors in agriculture normally achieve their objectives.
Price Ceiling Achievement of its objective
Price ceiling help prevent consumers from exploitation by producers or suppliers. However, the shortages caused by this legal approach normally undermine the achievement realized through stable prices (Mankiw, 2011).
Baumol, W. J., & Blinder, A. S. (2010). Macroeconomics: Principles and Policy. New York: Cengage Learning.
Mankiw, N. G. (2011). Principles of Macroeconomics. New York: Cengage Learning.
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Our essay writers are graduates with diplomas, bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH MY ESSAY HERO TODAY AND GET AN AMAZING DISCOUNT