Question

In the 1970s, the U.S. government set the price for gasoline around one dollar per gallon. Define price controls and describe how some people believe they protect competition.

Answer 1

In the 1970s, the U.S. government set the price for gasoline around one dollar per gallon, to keep competitors from raising or dropping their prices too high or too low

Answer 2

Price controls are measures taking by governments to regulate the prices of a product or service by establishing maximum and minimum amounts in which these products or services can be sold. Usually, these controls try to achieve a balance and fairness for the entire population of a country during a crisis like high inflation, war or any other economic misfortune a nation may be going through.

Many people think that price controls protect smaller weaker competition from big unscrupulous bigger companies in the short run. Unfortunately, over longer periods of time, price controls tend to be detrimental to the quality and availability of the controlled product or service. Consequently, such a product or service may experience shortages and rationing thus increasing the chances of an underground or black market to arise and provide the service and product using unauthorized and unofficial channels.