(a) Outline any two objectives of a price control policy.
(b) Highlight any three effects of a maximum price control policy.
Explanation
(a)The objectives of the price control policy (mini-mum and maximum) are:
(i) The prevention of exploitation of consumers by producers.
(ii) And the avoidance or control of inflation.
(iii) To help low income earner e.g. minimum wage earn-ers.
(iv) To control the profits of companies (especially monopolists).
(v) Prevent fluctuation of prices of some products e.g. agricultural produce.
(vi) And to stabilize the income of some producers e.g. farmers.
(vii) To make possible planning for future output.
(b) Effect;
(i) It stimulates excess demand which cannot be satisfied i.e. shortage in the market.
(ii) It encourages hoarding of commodities by wholesalers and retailers.
(iii) It leads to creation of black markets or under-counter sales and its attendant high prices.
(iv) It encourages conditional sales of products.
(v) Shortages result in queue and racketeering.