Supply and Demand Is One Term Paper

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S. economy. Evers points out that gas prices ebb and flow in accordance with the law of supply and demand. Gas prices are higher because supply is limited and demand is higher. More people are concerned with gasoline because more people have cars to fill up. There is equilibrium between demanded and supplied gas. The proof of this can be found in the fact that there are not very long lines at gas stations, and there is not a gasoline shortage (Evers).

If the government were to step in and set a price ceiling on gas, people would buy more gas. This is according to a basic economic rule called the price effect (Evers). Suppliers of gasoline would react to this by providing less amounts of gasoline, and a shortage would result.

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Evers says it very well when she says that "Tampering with gas prices will result in price setting, shortages, long lines and wasted time" (Evers).

Judging by these two examples, it appears as though government involvement in the market economy has negative effects on the consumer. However, two small examples are not sufficient evidence to make a determination regarding the validity of the level of governmental involvement in price setting in the United States. Without government involvement, suppliers would be able to charge anything they wanted, which opens up the risk of unnecessary price inflation. With complete government control, the United States economic market would essentially be socialist in nature. Perhaps a balance between the two extremes is the best option.

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