In today's society, markets are often unfair. Prices tend to be set by the industry's market leader, and smaller companies have no say in the decision-making process. In the worst-case scenario, the market leader, which is able to benefit from economies of scale, will set prices so low that smaller companies will eventually be forced out of the market because they are unable to compete with the larger companies. Luckily, price controls are in place to prevent this from happening. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay There are two types of price controls: minimum prices and maximum prices. Price floors are the minimum prices set by the government when it believes the market price is too low. In contrast, price caps are set to prevent prices from exceeding a maximum limit. Both can be set above or below the current market price. An example of a minimum price would be the minimum wage. Minimum wages ensure that all employees receive at least a certain amount for their work and prevent businesses from exploiting workers. At the same time, they ensure that workers are able to maintain a certain standard of living and encourage the unemployed to look for work. However, no government regulation is without its drawbacks. While minimum wages are capable of increasing employee wages, they also lead to an increase in the unemployment rate as some companies may no longer afford to keep the same number of workers as before. Furthermore, employers will develop the mentality that higher wages should only be paid to those with more skills, and will therefore ignore the unskilled, preventing them from finding work. Price floors create problems when they are set above the market price. For example, an apple, which originally cost HK$5, now has a minimum price of HK$10. While the higher price leads to an increase in supply, demand will also decrease. Manufacturers who fail to identify it will start producing large quantities despite falling demand, hurting their business. The only way for producers to benefit from this policy is for their supply curve to be inelastic, but consumers will continue to be hurt anyway as they will have to pay higher prices. On the other hand, rent control is an example of a price cap. . Rent control is used to make housing more affordable for low-income tenants by ensuring that their rent does not exceed a certain value. If the price cap is set below the market price, demand for rental properties will increase as they become less expensive. However, in the long run, the supply of rental housing may decline as construction companies will be dissuaded by the lower profit margin earned from building such housing. Meanwhile, owners may stop maintaining their properties to save costs and because they no longer have to worry about demand. The excess demand and limited supply created will in turn cause a shortage of rental accommodation, meaning some customers may be left homeless or forced to buy property. Shortages of goods mean customers will have to buy on a first-come, first-served basis. base served and encourages illegal activity. In the 1970s the American government set the maximum price of gasoline below the market price. Vendors began selling on a first-come, first-served basis, and customers had long waits..