-Price regulation is a policy of setting maximum or minimum prices by a government agency, legal statute or regulatory authority.

-A maximum price set artificially by the government of firms so that goods are bought and sold at that price level which is below the market equilibrium price level.

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-When the price is set at PC, there is a fall in quantity supplied from Q0 to Q1 and an increase in quantity demanded from Q0 to Q2, creating an excess demand condition. The government will have to replenish the shortage from the buffer stock, failing to do so, it will have to conduct rationing to solve the disequilibrium condition. The rationing will be done through several system of distribution like the first-come-first serve, social aims or meritocratic system

-Black market condition will evolve for the quantity set at PC which will contribute a rise in the price from PC to PBM if the quantity supplied at Q1 can be re-sold

-Consumer surplus can only be attained for those who can buy the goods at the price level at PC but consumers will have to buy at PBM, there will be a loss of consumer surplus for these consumers

-Minimum price set artificially so that goods are bought and sold at that price level which is above the market equilibrium price level

-When the price is set at PF, there will be an increase in quantity supplied from Q0 to Q2, and a reduction in quantity demanded from Q0 to Q1. Consequently, there will be an excess supply condition

-For the labour market, the excess supply of labour will contribute to unemployment and thus, the minimum wage scheme is not favoured by trade union

-For the resource market, the excess supply condition will be a loss to the producer if goods are perishable as the government cannot buy up excess stock. The floor price will not work for the producers if there is a reduction in supply which means the government’s subsidy will be lesser and the total revenue for producers will be reduced.

-Direct tax is directly levied by the authorities on the consumers

-Indirect tax is tax levied by the authorities on producers. The producers can then pass on the burden of the tax to the consumers.

a) Specific tax, or per unit tax, is a constant tax amount levied on per unit of goods sold. It causes a parallel shift of the supply curve up and to the left.

b) Ad valorem tax, a percentage tax, takes a percentage of the price of good concerned. It changes as the price of good changes. It changes the slope of the curve as the curve pivots anti-clockwise upwards.

c) Lump sum tax is a fixed amount of tax regardless of the amount of quantity.

-Tax incidence refers to the distribution of tax burden between the consumers and producers

-Tax incidence that falls on the consumers

-Tax incidence that falls on the producers

-Tax burden falls entirely on producers when supply is perfectly inelastic and when demand is perfectly elastic.

-The minimum price is set above the market equilibrium and producers are prohibited from selling below that stipulated price.

-protect the income of producers from falling

-create surplus which can be stored in preparation for future shortages

-prevent workers income from falling below a satisfactory level

-elasticity of demand and supply of the good

-With the surpluses, government will have to sell them abroad, buy up the surpluses or destroy them. Surpluses reflect serious misallocation of resources in the country.

-Financing surpluses will impose heavy burden on taxpayers

-High prices may induce inefficiency. Producers are less motivated to look for cheaper and more efficient methods of production.

-A maximum price is set below the market equilibrium price and producers are prohibited from selling above that stipulated price.

-A price ceiling is usually imposed with the aim of achieving some form of equity or to protect consumers in times of crisis.

-Elasticity of demand and supply of the good

-Occurrence of black market

-A tax based on the assessed value of real estate or personal property. -Ad valorem taxes can be property tax or even duty on imported items.

-Specific subsidy is a constant subsidy amount given per unit of goods sold. It causes a parallel shift of the supply curve downwards and to the right.

-Ad Valorem subsidies a percentage of the price of good concerned. It changes as the price of good changes. It causes a pivoted shift of the supply curve in the clockwise direction.

-A fixed amount of subsidy regardless of the amount of quantity.

-Consumer surplus is the difference between the maximum amount that consumers are willing to pay for a given quantity of good and what they actually pay (equilibrium price).

-Producer surplus is the difference between the amount received by producers and the minimum amount that they are willing and able to accept for supplying the good.

-Deadweight loss is the sum of consumer and producer welfare (surplus) loss when there are allocative inefficiencies as a result of the restriction of