Typical of price ceilings, the ancient Indian political philosopher known as Kautilya advocated controls to protect against merchant greed, fixing a profit of 5% over the fixed price of local commodities, including textiles. If severe weather were to render the textile market more uncertain (for example, if transportation routes were damaged), what would reasonably happen?

Question

Quizplus · Accepted Answer

With a price ceiling of just 5% above the fixed price, severe weather could lead to higher costs and risks for merchants looking to supply textiles. As a result, fewer merchants may be willing to take on the added risk and cost, leading to a potential shortage in the market.

Typical of Price Ceilings, the Ancient Indian Political Philosopher Known