Question

Suppose that after pork prices rise dramatically, voters demand that the government place price controls on bacon.
Identify the two economic laws that will apply to this scenario. How will these two laws change the market for bacon?
Write this in 3 sentences

Answer 1

The two economic laws that apply to this scenario are the Law of Demand and the Law of Supply. According to the Law of Demand, as the price of bacon increases due to rising pork prices, the quantity demanded by consumers will decrease, leading to a potential shortage if price controls are implemented. Simultaneously, the Law of Supply suggests that when price controls are placed, it may discourage producers from supplying enough bacon to meet demand, exacerbating the shortage and leading to potential market distortions.