Question

You have discovered have royal blood, and now that you have taken college economics you are ready for the world. The small European nation of Genovia has asked you to take the crown and lead them. It is a market economy. However, you feel you could increase the social benefit of that country based on your understanding of price floors and ceilings. Therefore, your first act as leader is to place a price floor or ceiling on a particular good. What would that good be and why

Answer 1

Answer and explanation:

Market economies are those where the price is driven by supply and demand forces. They promote private property and little to no government intervention. However, it could lead to unfair market practices and arbitrary pricing restricting access to certain goods or services from unfavored sectors of the market.

In the case, the price ceiling could be set on consumer staples -as usual- such as gasoline while price floors could be established for wages. In such scenarios, central planning is necessary. Setting price floors and price ceilings could be a measure to be implemented to avoid setting prices below from what individuals can profit (floor) or above from what consumers can afford (ceiling).

Answer 2

A price ceiling is a mandated maximum amount that a seller is allowed to charge for a particular product or service. These are usually implemented on staples in order to ensure that everyone has access to basic necessities.

My first act would be to implement a price ceiling on housing. This is known as rent control. This would allow people access to fair and necessary housing. It would also protect them from rising prices in the future.