![]() Government action therefore exacerbated the crisis. Because the price did not rise naturally in response to the shortage, as it would have done in a free market, consumers did not choose to conserve or find alternatives to gasoline. The direct result of this was a flood of people buying gas at the same time, leading to increased demand and further shortages. ![]() ![]() This is because when the government intervenes in the market, it distorts the signals that tell consumers the true value of a good or service.įor example, during gasoline shortages in the 1970s, the government limited the price that gas stations could charge to keep gas affordable. However, this is wrong in reality, government intervention creates confusion in the functioning of the market. ![]() Today, many people believe that governments should determine the price or supply of goods in the market. ![]()
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