Economics

Please answer all parts of the following questions. Please number your answers.

1. The prices of goods and services tend to fluctuate over time.

    In March 2020, the prices of anti-septic liquids and facial masks rose considerably and are now higher than what they were in 2019.

    What demand factors have caused the prices of these goods to rise? 

2. In the past, governments in various countries have set price controls on rents. Essentially, government fixed a price that did not allow landlords to charge          rents above a certain level. Such price controls may still be used today in some countries.

   What is the government trying to achieve or who is the government trying to help by setting these maximum prices? Do you think that such price controls     are a good idea? Explain.

3. If the price of milk rises from $3 a gallon to $3.30 a gallon, do you think that the quantity demanded for milk will fall a lot or only very little? Explain your answer. (You are advised to make use of the concept of elasticity of demand to answer this question.)