Question 1

Use the principles of market forces (demand and supply) to illustrate the distortions arise due to (i) administering a price floor and (ii) price ceiling in the market. Hint: first explain what do each concept mean, why are they applied and how do they create distortions in the market. Are there any unintended consequences due to the administration of price floor or price ceiling? You can use any product or service of your choice to illustrate your answer. (50marks)

2 Question 1 Use the principles of market forces (demand and supply) to illustrate the distortions arise due to (i) administering a price oor and (ii) price ceiling in the market. Hint: rst eaptain what do each concept mean, why are theyr applied and how do they create distortions in the market. Are there any,' unintended consequences due to the administration of price oor or price ceiting? You can use any product or service of your choice to lustrate your answer. (5Un1arks)|