b. Prices in most market are free to rise or fall to their equilibrium levels, no matter how high or low those levels might be. However, government sometimes concludes that supply and demand will produce prices that are unfairly high for buyers or unfairly low for sellers. So, government may place legal limits on how high or low a price or prices may go. With the rapidly rising of the crude oil price, it caused to increase in gasoline price and lead to increase the equilibrium price in the market. This rapidly rising price of gasoline greatly burdens low- and middle-income household. Analyse how government policy can adjust on this situation to keep gasoline remain affordable for these household.

b. Prices in most market are free to rise or fall to their equilibrium levels, no matter how high or low those levels might be. However, government sometimes concludes that supply and demand will produce prices that are unfairly high for buyers or unfairly low for sellers. So, government may place legal limits on how high or low a price or prices may go. With the rapidly rising of the crude oil price, it caused to increase in gasoline price and lead to increase the equilibrium price in the market. This rapidly rising price of gasoline greatly burdens low- and middle-income household. Analyse how government policy can adjust on this situation to keep gasoline remain affordable for these household.

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 7PA

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