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The Impact of Price Restrictive of Economic Goods Another Point of View in the Governmental Pricing

Journal of Administrative and Economics Science

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Title The Impact of Price Restrictive of Economic Goods Another Point of View in the Governmental Pricing
 
Creator Alomar, Ibrahim S.
 
Description Resource allocation mechanisms are considered as one of the most important economic policy tools on the use of which economic systems differ cons iderably according to ideo logical, political or even social considerations at times.  However, market pr ice is considered to be one of the most important resource allocation mechanisms where the forces of supply and demand determine equilibrium price and quantity. But it has become increasingly customary for economic authorities to restrict prices for political or social reasons by imposing  a price which is higher or lower than the market price. Since this may affect the supply and demand sides of the exchange process , the study atte mpted to trace the effect of this on the optimum allocation of economic resources. The st udy concludes that restri cting prices by imposing price ceilings has the effect of reducing consumer  surplus both in the short and long runs  depending on the elasticity of supply. An example is the price restriction of gasoline, wheat, and animals feed. Since Pareto optimality postulates a situation that cannot be improved upon , it follows that  the maximum consumer surplus cannot be attained with  a price restriction but rather without it.  Keywords:  Pricing, Economic Goods,  Resource Allocation, Market Price,  Consumer Surplus, Pareto Optimality.
 
Publisher Qassim University Academic Publishing and translation
 
Contributor —
 
Date 2012-04-26
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
 
Identifier http://publications.qu.edu.sa/ojs/index.php/economic/article/view/500
 
Source Journal Of Administrative And Economics Science; Vol 5, No 1
 
Language eng
 
Relation http://publications.qu.edu.sa/ojs/index.php/economic/article/view/500/486