The government of Marketland imposes a price ceiling on milk. Why would the government of Marketland take such an action?

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To help the government collect taxes on milk
To help consumers afford milk, which is important to children
To help producers make milk, which is important to children

1 answer

The government of Marketland would impose a price ceiling on milk primarily to help consumers afford milk, which is important to children. Price ceilings are typically put in place to prevent prices from rising above a certain level, making essential goods like milk more affordable, especially for families with children who need it for nutrition and growth.

Here’s a brief overview of the other options:

  • To help the government collect taxes on milk: This is not a common reason for implementing a price ceiling. Tax collection usually happens separately from price controls.

  • To help producers make milk, which is important to children: A price ceiling can actually discourage production because it limits the price that producers can charge. This could lead to shortages, which is contrary to helping producers.

Thus, the main rationale would be to protect consumers and ensure that necessary goods remain accessible.