Question

3. You belong to a national organization called Hamburger Lovers USA. Its main purpose is to reduce the price of

bamburgers. the organization wants the government to establish a maximum hamburger price, called a ceiling
price, that ranchers can charge for beef. The thinking is that, with the lower cost of beef, hamburger chains will
charge less. Is this reasoning correct? Explain.

Answer 1

A price ceiling on beef can help reduce the cost of hamburgers, but it may also have negative effects such as deadweight loss and blocking potential transactions. Removing price barriers and allowing market negotiations can increase the overall social surplus.

Step-by-step explanation:

A price ceiling is a maximum price that can be legally charged by a seller for a good or service. In the case of the national organization Hamburger Lovers USA, they want the government to establish a price ceiling on beef to reduce the cost of hamburgers. The reasoning behind this is that lower beef costs will lead to reduced prices at hamburger chains. However, while price ceilings can benefit consumers by transferring some producer surplus to them, they can also create deadweight loss and block potential transactions. Removing price barriers and allowing prices to adjust naturally through market negotiations can increase the overall social surplus.

Answer 2

Yes this reasoning is correct because the goal of pricing is to make some amount of money out of the deal so when initial prices begin at a lower price its will tumble through the cycle affecting all prices involved in the process.

Step-by-step explanation: