Price is rising! What should government do?

Resources: CLICK ME :)

       According to the news above, consumers are soaring that chicken’s price is getting higher although the fasting month has not started. This condition is getting worse since some of the consumers start to change their choice from chicken to beef or lamb because they cannot afford the high price of the chicken.

If this condition continues, a surplus condition will happen since that the purchasing power is falling. Consumers are forced to switch their choices to beef or lamb. Since lesser people buy chicken, the demand of chicken is falling while the supply of chicken remains the same.

         In my opinion, to solve this condition, the government should impose price ceiling to prevent the price of chicken from getting higher and higher. By imposing price ceiling, consumers are allowed to purchase the chickens that were previously in a higher price. The purpose of price ceiling is to protect consumers from exploitation by suppliers.

           However, when there is a price ceiling, shortage of supply will occur. This is because when the price of the chicken is forced to fall, the demand for the chicken rises as the graph shown. If the price ceiling has been carried out for a long period, the black market will exists.

By Liew Hui Min 0315658