Answer to Question #81224 in Economics for Rene

Question

assume that the market price for a 5kg bag of rice is R80 and the government has announced that a 5kg bag of rice cannot be sold for less free answer

Answer 1

When the market price of rice equals the equilibrium, the number of sales and purchases will be the same. This is an ideal situation. Sellers will sell everything they want. Buyers will buy all the goods that are needed.
If the government prohibits a reduction in the price of rice, then there will be no shortage of this product in the market.
Manufacturers can raise the price rice. After all, the state does not prohibit. Then there will be overproduction of rice or surplus. We know buyers will buy rice less than the producers will produce it at a price higher for the equilibrium price.