Each year, during festive seasons, Malaysian Government will impose a price ceiling on

some items like round cabbage, garlic, pomfret, shrimp, standard chicken, and chicken

eggs. A seller will definitely increase the price of a product if the demand of that product is

higher in order to increase profit. Thus, there is always the case when buyers will complain

the prices are too high and sellers will say the prices are too low. This is when the

Government will come into the picture and impose price controls to eliminate such

dissatisfactions.

If a price ceiling is set sellers will experience smaller profit margin. Hence, they will find a

way to cover the loss by selling lower quality of these controlled items. This will not be

beneficial to the buyers because they pay the amount and get a lower quality item in return.

If the enforcement of price ceiling is loose, sellers will retain these controlled items, which

are in higher quality, and sell them at a higher price.

Question $1$

"A seller will definitely increase the price of a product if the demand of that product is

higher in order to increase profit." Illustrate this situation in demand$-$and$-$supply graph.