According to an article (Star 30 June 2010) about the supply of the sugar
will increase 10% start from the festival around the corner such as Hari Raya
Puasa in September. The supply of sugar is just increase 5% in last month and
the total percentages that increase after Hari Raya Puasa are 15%.
Sugar is
the necessary goods. Necessary goods are normal goods that necessary for human
beings. In this case, demand of sugar will increase so rapidly in Hari Raya
as sugar is the necessary ingredients for mostly of the Malay food. By to meet
this demand of the sugar, the supply
of sugar will increase around 15% which is from 100,000tonnes to
115,000tonnes.
Unfortunately in market have some retailers even is a big
supermarket also couldn’t afford all the sugar that producer or supplier supply
for them as the sugar supplier wanted cash up front and this caused the sugar
shortages.
Government will take a part in market when the
shortages occur and control the shortage by using price ceiling. Price ceiling
is the price that the government use for legal limit the producer on how much
that the necessary product can be, so that the poor people can be afford to buy
it. Next, the price ceiling is below the equilibrium, so it is increase in the
demanded of the sugar and the supplied of the sugar are occurred shortage. In this case, government controls the price and makes them will not be
floated and beside that government also solved the supply problems temporary by
issued licenses to seven retailer associations which included Indian provision
shopkeepers, Indian-Muslim association and Bumiputra traders association to
distribute sugars to their members which mean by using this way, the retailers
and big supermarkets will not lack of sugar’s stock in this September and also
can prevent the shortages of sugar.
However, if the government continuous set the prices
and does not changing the prices of the sugar on the future, the shortage will
lead to some negative impact such as the increasing of the black market. For
example, if the customers unable to buy enough in legal markets, they will
consider buying from the black market. Black market is an illegal market that
was hidden and operates from the legal market which will provide goods and
services. The prices of the goods in black market actually is much higher than
the legal market, but when the quantity of the goods is lesser, the consumer
will forced to buy the goods with the higher price when the shortage is
occurred.
When a housing
market is applied by price ceiling is called a rent ceiling. If the rent
ceiling is above the equilibrium rent, its means that was no any effect whereas
if the rent ceiling is below the equilibrium rent, its means that was an effect
.In addition, if the rent ceiling is below the equilibrium, the effect will be
in the illegal region. For example, the equilibrium rent is at 1200 dollars in
a month but a rent ceiling is set at 1000 dollars in a month which is shows the
rent ceiling is set bellow the equilibrium. Lottery, first come, first served and discrimination allocated
the scare housing and rent ceiling decreases the quantity of housing.
The government should set a price floor to the price
of the sugar. Price floor is to help the suppliers to control and stable the
price of the sugar in the market. It also can prevent the prices becoming too
lower. The government need to mandate a minimum price on the price of the
sugar, so that at least the supplier still can survivor in this market. The way
to maintain the price floor over the long term is the equilibrium price is
determined when the quantity demanded is equal to the quantity supplied.For a price floor to be effective,
it must be set above the equilibrium price. If it's not above equilibrium, then
the market won't sell below equilibrium and the price floor will be irrelevant.
Besides
that, government also will provide the subsidies for necessary goods such as
petroleum, cooking oil, rice,sugar and flour.
Production subsidies is normally paid by the government for the assistant paid
for some of the business or sector and commonwealth to decrease the burden of
the people. With those subsides,
citizen are encourage to increase the production .When there are plenty of
supply, then the price of the sugar will also maintain and become more stable.
Moreover, the government can ban sugar exports. Since domestic sugar producers
could no longer sell in international markets, they turned to selling
domestically which shifted the refined sugar supply curve to the right and
lowered domestic sugar prices. This benefited refined sugar consumers in the
short-run and the flow of supply of sugar will stay at the domestic market and
this will solve the problem of the shortage of sugar in the market and help to
prevent the high prices of sugar.
Lastly, government should decrease the tax incidence. The tax incidence is the burden of the
consumer and producer to making a choice in economies because when the goods is
taxed, its price will rise which will affect the quantity of demanded in the
market. But, if the government decreases the income tax of citizen, then the
consumption also will increase and the burden of citizen also will decrease.
1 comments:
nice!!!after reading this i know how government control the sugar price^^
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