Question

Suppose that after pork prices rise dramatically, voters demand that the government place price controls on bacon.
Once these two laws have taken effect, what problem is most likely to occur. Be sure to use the correct economics term for your answer?
Write this in 5 sentences

Answer 1

When the government imposes price controls on bacon following a dramatic rise in pork prices, the most likely problem to occur is a **shortage**. Price controls, such as a price ceiling, set a maximum price that can be charged, often below the market equilibrium price. This leads to increased demand for bacon, as consumers find it more affordable, while simultaneously discouraging producers from supplying enough bacon due to reduced profitability. As a result, the quantity demanded exceeds the quantity supplied, creating a situation where not everyone who wants bacon can obtain it. This mismatch between demand and supply can lead to black markets or reduced quality in the available product as sellers seek alternative means to manage the constraints imposed by the price controls.