Answer to Question #188405 in Economics of Enterprise for kavisha

Question

Demand for hand sanitizer is surging around the globe as the new coronavirus spreads, prompting retailers to ration supplies and online vendors to hike prices. Sales of hand sanitizers and similar products have swelled across several international markets since the COVID-19 outbreak began in January. The virus, which originated in China, has now spread to more than 60 countries. According to data published Tuesday by market research firm Kantar, U.K. hand sanitizer sales saw a year-on-year increase of 255% in February. Meanwhile, British shoppers were buying 7% more liquid hand soaps and spent 10% more on household cleaners compared to February 2019. (Source: CNBC, 3rd March 2020

ii. Due to high demand of hand sanitizer, it will lead to increases of price by producers. Based on your opinion, what should a government do to control the price of hand sanitizer to keep hike during the pandemic.

Answer 1

Demand for hand sanitizer is growing around the world; governments can help in the fight against hiking prices of essential commodities such as hand sanitizers. Governments step in to prevent producers from price hikes by setting up price controls, price controls set up price ceilings of commodities.