discussion on price floors or ceiling

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you have to reply to this discussion by at least 300 words . Then Your required to responses to 3 peers’ posts

In this discussion please share your opinion and reasoning about why or why not the Government should be setting price floors or price ceilings in the market of some specific goods / services. If possible, you should use your own experience in dealing with such situations from your workplace.

1st student:

In the world of vaccines and medication, having government imposed price ceilings makes sense with some caveats. Price ceilings make sense so that portions of the population are not restricted from protection against easily preventable diseases. Vaccinations of the healthy portion of the population allows for a phenomenon called “herd immunity”, where the likelihood of someone that cannot have a vaccination (elderly, sick, immunocompromised,…) coming in contact with the disease drops dramatically. In this way, when one person gets a vaccine, they are not only protecting themselves, but protecting those around them as well.

As a nation, we do not want to have areas that may be low income that are unable to afford an expensive vaccine to have diseases potentially killing a large percentage of the population. The first cause is the humanity of it, that no one wants to see a person die from anything that is easily preventable. Second, localized areas of increased disease frequency will lead to economic imbalances through a geographic region that could lead to instability of the economy.

Now, for the caveats. The largest one is that the manufacturing costs must be considered, with room for profit for the manufacturer. As most, if not all, large pharmaceutical companies are publicly traded, they must provide returns to their investors. If the company does not provide enough returns to investors, the board of directors may push the company to explore other medications or products that can have a larger profit margin. This would restrict the number of suppliers to the market, and for a product that can have such a far reaching affect on the total population, multiple sources are necessary.

Development costs must be factored in as well. If the manufacturer can cover costs and return some value to shareholders but not have development costs factored into the price ceiling, development and experimenting in search of new medication will cease to continue. This would not be a problem if all disease had been eradicated in the world, however we have a long way to go before that becomes a reality.

2nd student:

The Human Capital Management industry often benefits greatly from government regulation, as it forces companies to place greater attention to compliance – which is one of the primary value propositions of ADP and many of its competitors.

The most recent example of this occurrence was the introduction of the Affordable Care Act (ACA). The ACA mandated that businesses with 50 or more employees offer affordable healthcare options to their full-time employees and provide proof to the IRS via forms 1094/1095-C. ADP achieved record sales during the years that the ACA was enforced because they developed a software solution that made it possible to fill out the forms.

Government intervention in healthcare is a highly politicized topic, with many arguments for and against capping costs. Looking at many other highly developed nations, we see price ceilings for healthcare in effect. The complexity of the U.S. healthcare system makes it difficult to say whether it would translate effectively to our economy. Arguments against price controls usually cite cases of well-intended legislation that did not live up to the desired effect because they create excess supply or demand. For example, rent controls enacted in NYC that were meant to offer affordable housing effectively reduced supply and drove up rental costs.

Personally, I think there very few cases where price controls can be effectively applied in a capitalist economy. However, after receiving thousands of dollars in hospital bills for the birth of my daughter (even with a health insurance policy), and an itemized bill shows a $50 charge for Advil provided in the hospital, it makes me want to consider testing some price ceilings in the healthcare industry.

3rd student:

In such a competitive world where education has become the standard of measurement in our society, you can bear with me that without education it will be harder to climb the ladder of success to the top. Who in this group would say he/she is not a beneficiary of education? No one I suppose.

Higher Education is like the icing on top of a cake without which your journey is not complete. Well Montclair State University provides this icing to most of the students who come here. The question is, is this icing free of charge? NO! it comes with a price. In as much as Montclair State University is state owned, does not guarantee free tuition, it comes with a fee!

Most of the well-known Universities are sitting on fortunes. Alums from past generation have built huge trust funds for the use of these institutions. So, with this wealth, why does Montclair State University still ask vulnerable students who are trying to make it in life to pay fees before they can enjoy the benefits of education?

The problem is demand. We need a degree to get an everyday job talk less of professional jobs and it is only Colleges and universities that provide this true asset. The worst-case scenario is that degree from big name universities are considered valuable and these institutions are aware of this and uses it to their advantage and make profits off these students.

In leu of the fact that these universities are public institutions, they are funded by the state or federally. Therefore, government has the mandate to pass laws that implements price ceiling on college education. This will lower the cost of acquiring education for the average person whilst colleges still make their profits.

An emphasis on the restricted or unrestricted quality of the various sources of revenue of universities gives a better explanation. Most universities and colleges have four main sources of revenue: state appropriations, research funding, gifts and endowments, and student tuition. There are some restrictions regarding the first three on their use. The appropriation from the state is meant to be used for educational expenses, endowments are mainly used for projects of wealthy donors and research funding basically promotes specific research projects.

Tuition from students are used for anything that the school’s administrators want, such as administrative salaries, construction projects, football coaches, real estate and interest payments. Due to the need to achieve goals like most firms, profit making is of major consent. The administrators of most universities have developed strategic means of increasing their unrestricted revenue, they are even willing to forgo state funding with the hopes of bringing in more tuition. The administrators, with time are making tuition central in their budgets, making state funding go down.

As students struggle to pay their tuition each semester through financial aid and loans, there are no set prices ceilings in the higher education sector for which institutions are not supposed to go beyond. The bottom line is the federal government has a couple of levers at its disposal to potentially control the cost of acquiring higher education. The federal government’s ability to control access to federal student loans, this eventually lower prices of tuition because when students are denied access to financial aid and student loans the universities loss more students hence the administrators are forced to lower the tuition. The ability to challenge an organization tax-exempt, tax-exempt makes it easier for universities to maximize their profits since the administrators are acting like entrepreneurs. Should the government cut this benefit it will make the universities cut down on the cost of tuition. When universities must pay taxes and compete like other entrepreneurs do, they might have to find ways of staying in business.

MSU is no different from all the other universities acting as entrepreneurs who are building their brand name and with tag lines “It’s all here” that sets them above their fellow competitors, to attract more students. An effective price ceiling is the best thing that the government can do to help students and still keep colleges and universities in business for a long time to come.

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