Answer to Question #147004 in Macroeconomics for Cerise

Question

Hi! How are you? I would've like to what negative effect would arise if the government decided to put a price ceiling on cellphone and internet services and save Canadians almost $250 per year. I need to link economics subjects such as supply and demand, AS/AD model, opportunity cost, unemployment, GDP, inflation, etc.

Answer 1

Firstly, it will lead to decrease supply of internet services and cellphones to the country since it will lead profitable to the suppliers. Also, it will lead to increase of demand for the internet services and cellphones due to lower prices which consumers will afford. Besides that, it will lead to an increase of unemployment since most people working for those companies will lose their jobs due to decline of profits. On the hand, it will increase the Gdp of the country because people will spend more due decline of the prices.