What actions might be taken by the government of (one country) to Essay

What actions might be taken by the presidency of (one country) to reduce and limit price fluctuations of hot chocolate - Essay ExampleIf the price of any crossroad fluctuates highly then the government can limit the fluctuation through minimum and maximum prices, also referred to as price flooring and price crown respectively (Dineshbakshi, 2015).The government can set a maximum price which must be below the equilibrium price of coffee bean in tack together to be effective and disallow trading above that price level (Dineshbakshi, 2015). As, the price is below the equilibrium it go forth lead to excess demand and last lead to a shortage. In such cases there will also be some consumers who will be willing to buy coffee at a higher price than the price set by the government and this will lead to black markets being created (Dineshbakshi, 2015). The situation cannot be left this direction and let the economic situation of the country worsen, thus further actions are required by the government (Dineshbakshi, 2015). Government may take total reign of supplying these goods or even producing goods itself (Dineshbakshi, 2015). But the problem may remain as people may not sell all their stock of coffee and black markets may still remain. On the other hand if the government takes control of the production in its hand, it will be accompanied with may trouble and other technical issues. The government can also help in eliminating this black market and the shortage in the market by supplying coffee from its own stocks (Dineshbakshi, 2015). All these steps by the government will lead to the supply curve shifting rightwards, achieving equilibrium and eliminating shortage (Dineshbakshi, 2015).On the other hand, if the government sets a minimum price which must be above the equilibrium price in order to be effective and ban trading move than that price level it may also help in reducing price fluctuations (Dineshbakshi, 2015). As the price is set above the equilibri um price it will lead to higher supply and lower demand leading to a surplus of coffee in the market (Dineshbakshi, 2015). Surplus can also be catered