Question

8. Analyzing Effects: How would U.S. government price supports for U.S.-made tennis rackets

Answer 1

Price support will be beneficial to producers but costly to consumers.

Price support refers to efforts by a government to keep the price of a commodity higher than it should be were it priced based on supply and demand.

Ways the government can do this include:

• Subsidies
• Production quotas - limiting the quantity produced
• Price controls

Price supports make prices higher than they should be which would give producers more profit therefore tennis racket producers benefit.

On the other hand, they make things more expensive for consumers who will be forced to spend more than they usually do on tennis rackets thereby making it costly to them.

In conclusion, price controls help producers but are costly to consumers.

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