Situation Analysis

Situation Analysis

Situation Analysis

Government policies are meant to help in development of the economy. However, there are some policies that bring more harm than good in the economy. According to an article published by the online magazine of the American enterprise institute, reduction of price competition as a result of discrimination price has caused a faster increase in prices that would not have been so if such policies were not adapted.

Although the government had good intention, introduction of price discrimination increased the cost of living (Kenneth, 2012). Middle and upper-middle class parents are the most affected since they experience trouble in paying the college fees for their children.

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The production of goods and service with a prior knowledge of the amount the customer is willing and is able to pay fights the market forces of demand and supply. Although the idea behind this policy is to create equality, lower income earners are prone to less spending and thus they cannot enjoy all the goods and services offered.

Price discrimination contributes to economic problems such as unemployment since there are lower production needs. Again, where price discrimination affect overall economic development because of high level of spending that leaves little to be invested. Price discrimination affects the market depending on the elasticity of the commodity.

Kenneth Gould. (2012). The High Cost of College: An Economic Explanation. Retrieved from Retrieved on 27th Oct, 2014

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