Question

In 1970s, the US government set the price for gasoline around $1 per gallon. Define price controls and describe how some people believe they protect competition.

Answer 1

Price controls are government restriction on how much can be charged for good and services in the market. They include floor prices (the minimum that can be charged) and ceiling prices (the maximum they can be charged.).

Many people believe it protects competition, for example it prevents major companies from pushing out smaller business with prices so low that no one can compete with them.