Price controls on common food items have been implemented in some larger countries like Mexico, Thailand, and China to control inflation. Price controls set maximum prices that can be charged for specified goods. According to economic theory and studies, price controls distort markets by reducing supply as they discourage production and trade. Farmers in Argentina protested in response to export taxes and domestic price controls, leading to shortages. When governments impose price floors or ceilings, it results in a loss of economic efficiency known as deadweight loss. While some groups benefit from lower prices, others lose out.

1. Mason Falk
Professor Geile
3/11/2019
Microeconomics Tuesday & Thursday
https://www.nytimes.com/2008/04/07/business/worldbusiness/07iht-controls.4.11735373.html
Price Controls on Food
Although it is not too common in the United States of America, price controls on
food in bigger countries like Mexico, Thailand, and China have taken place on common
items like bread, milk, sugar, and even something as simple as instant noodles. Price
controls can be defined as a government regulation establishing a maximum price to be
charged for specified goods and services, especially during periods of war or inflation. I
read in a microeconomics text book that the model of demand and supply shows that
markets unrestricted from government intrusion remove surpluses and scarcities and do
a respectable job of retorting to the desires of the customers. Both consumers and firms
sometimes try to use government to change the market outcomes in their favor. From
the article, International economists advise that price controls and other interferences
lead to market alterations like condensed goods because they daunt native manufacture,
processing and trade. By diminishing the fundamental causes of inflation, price controls
stop market explanations, these experts say. Argentina, which forced an export tax on
grains in accumulation to controls on local food prices, has been stunned by
countrywide gripes by farmers in response, leading to meat and dairy shortages and
paralyzed grain exports. The concepts of consumer surplus, producer surplus, and
deadweight loss allow us to measure the benefits consumers and producers receive

2. from competitive market equilibrium. These concepts also allow us to measure the
effects of government price floors and price ceilings and the economic effect of taxes.
Price ceiling is defined as the legally determined maximum price that sellers may
charge. Rent control is an example. The government also can impose a price floor,
which is defined as the minimum price sellers may receive. For example, the
government has been setting price floors that are above the equilibrium since the 1930s.
The leaders of these countries are eager to comfort the load on their peoples and dodge
common disturbance by imposing price controls. "Governments need to take focused
action, with direct subsidies for the poor rather than the whole country," a World Bank
economist, Don Mitchell, said. "Income transfers or food assistance for poor people
will work more efficiently and sustainably than more general steps at the national
level." When the government imposes price floors or price ceilings, three important
results occur: There is a loss of economic efficiency. Back to the rent control example,
it reduces economic efficiency because fewer apartments are rented than would be
rented in a competitive market. Like you mentioned in class, the resulting deadweight
loss measure the decrease in economic efficiency. Also, some people lose in this. The
landlords for example of the rent-controlled apartments who abide by the law and
renters who are unable to find apartments to rent at the controlled price. And finally,
some people win. The winners from the rent control are the people who are paying less
for rent because they live in rent-controlled apartments. Landlords may also gain if they
break the law by charging rents above the legal maximum for their rent-controlled
apartments, provided that those illegal rents are higher than the competitive equilibrium
rents would be. 536 words