Question

Over concerns with rising food prices, Israel passed the Food Act in 2014. Amongother things, the Act required supermarkets to post online all of the prices of products they sold intheir brick-and-mortar stores. List one reason why you think this regulation could lead to lowerprices and one reason why you think it could lead to higher prices, and explain.

Answer 1

Answer:

Why the regulation could lead to lower price is because of the visible pricing competition

Explanation:

This is the process whereby competitors who are in the sale of similar products go online or over the internet to perform a research on current prices of other competitors with the intention of discounting the price of their own product, thus, gaining more customer and sales.

In summary, displaying the price of product online improve competition and merchant aim to retain more customer.

Answer

Why the regulation could leas to a higher price is because is creates a monopolistic environment for a particular product.

Explanation

In this case, since the price of the product are visible online, the competition become high and the price of competitors are constantly reviewed downward. However, due to the downward review of price, the demand will become high which will in-turn lead to scarcity of product therefore making it expensive