Question

"explain why economists usually oppose controls on prices"

I need the answers as a text not as a picture please..

Answer 1

the basic intution behind why economists oppose price controls is that when controls are put on the prices, economic decisions are distorted and efficiency is compromised. take an example of a simple market for any good. say pens. let's say the equilibrium level of price where supply = demand is 10$. but if the government puts a price control in action, say a price ceiling of 8$, the market will be distorted. at 8$, demand will be more than the supply. similarly, if a price floor is introduced at say 12$ per unit, there will be excess supply of pens. therefore, this is why economists do not favor price controls.