Explain ‘black marketing’ as a direct consequence of price ceiling.
OR
Explain the concept of ‘buffer stock’ as a tool of price floor.
Explain ‘black marketing’ as a direct consequence of price ceiling.
OR
Explain the concept of ‘buffer stock’ as a tool of price floor.
Black marketing may be termed as a direct consequence of price-ceiling, as it implies a situation whereby the commodity under the government’s control policy is illegally sold at a higher price than the one fixed by the government, it may primarily arise due to the presence of consumers who may be willing to pay higher price for the commodity than to go without it.
OR
Buffer stock is an important tool in the hands of government to ensure price floor/minimum support price. If in case the market price is lower than what the government feels should be given to the farmers/producers it would purchase the commodity at higher price from the farmers/producers so as to maintain stock of the commodity with itself to be released in case of shortage of the commodity in future.
Black marketing may be termed as a direct consequence of price-ceiling, as it implies a situation whereby the commodity under the government’s control policy is illegally sold at a higher price than the one fixed by the government, it may primarily arise due to the presence of consumers who may be willing to pay higher price for the commodity than to go without it.
OR
Buffer stock is an important tool in the hands of government to ensure price floor/minimum support price. If in case the market price is lower than what the government feels should be given to the farmers/producers it would purchase the commodity at higher price from the farmers/producers so as to maintain stock of the commodity with itself to be released in case of shortage of the commodity in future.
