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Due to the virus outbreak, there is a surge in demand for mask and hand sanitizes. To prevent price hiking government impose a price ceiling on the products, however consumers are behaving irrational (I.e. mask hoarding and overbuying) then they impose a supply restriction on the market.

Isn't this causes the market to be very inefficient, because the dead weight loss is extended to the left or this lets the government buys up some masks for their own stock to cover the DWL? Do you think is there any other reason why government decides to implement this?

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  • $\begingroup$ You may want to follow economics.stackexchange.com/q/34425/8387 as it is a similar question (but no answer as of now). $\endgroup$ Mar 15 '20 at 8:20
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    $\begingroup$ The political intution behind a combination of price control and rationing (demand control rather than supply control) is that it may provides some access to these products to poorer consumers and protects them from the behaviour of richer consumers and sellers $\endgroup$
    – Henry
    Mar 15 '20 at 11:46

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