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Price Control

Song contains explanations of price control and regulation using key terms such as government intervention, price minimums, equilibrium, and surplus.

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Listen to explanations of price control and regulation using key terms such as government intervention, price minimums, equilibrium, and surplus.
Chorus
If they try to regulate the price of gold
Or any market where merchandise is sold
That intervention could take quite a toll
Through unintended consequences of price control
(x2)

Verse I (floors)
You can set a price minimum, that's called a floor
Everybody's got to sell at that price or more
It's a way to guarantee that sellers can make a profit
Keep the revenue stream flowin' like a faucet

Firms are better off, so they'll produce more
But buyers buy less than they would before
Because they can't afford to buy in the same quantity
So demand goes down, and that's your quandary

In a perfect market, the price would drop
Settle into equilibrium from the top
But because of the floor, the price doesn't adjust
And so we're left with extra quantity: a surplus

Subtract what's bought from what's produced
That's the volume of the surplus, with no good use
So the government can buy it and give it away
Or make a big stockpile for a rainy day

Chorus

Verse II (ceilings)
You can also set a ceiling, you know, like a maximum price
And doing that might seem like good advice
Because you protect the consumers from paying too much
And since most of them are voters, that could be clutch

They say, "My rent's going up, but my income's not.
Can you help me? I don't wanna lose my spot."
Don't get caught thinking that a ceiling solves it all
It can make you feel better, like Tylenol

It's supposed to help the poor and the indigent
But it only helps long-term residents
See, when the price of the rent is artificially low
Shortages in housing begin to show

Because nobody wants to move out
So people trying to move to the city just lose out
Unless they pay extra fees through the backdoor
Straight to the landlord, finding tricky ways to charge more

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