During World War II, candy producers responded to maximum prices by , leading to prices per ounce. (Related to Application 3)

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Application 3 PRICE CONTROLS AND THE SHRINKING CANDY BAR APPLYING THE CONCEPTS #3: How do price controls affect the market? During World War II, the U.S. government used a system of price controls to set maximum prices on all sorts of products, including candy bars. Consumer Reports compared the weights of candy bars in 1943 to their weights in 1939, before the maximum prices were imposed. In 19 of 20 cases, the candy bars had shrunk, causing the price per ounce to increase by an average of 23 per- cent. In other words, producers reacted to maximum prices by shrinking candy bars to match the relatively low maximum price. In the words of Consumer Reports, the shrinkage of candy bars is an example of "hidden price increases." Related to Exercise 3.6. SOURCE: Based on "Food Timeline FAQ: Historic Food Prices," Foodtimeline.org, accessed February 20, 2012.