Government Intervention in the MarketThe government can choose to set prices different from those set by the markets. Prices cannot fall below a certain minimum. For example, in the agriculture sector, the government can choose to subsidize farmers, set production quotas, or offer price support. The government can decide to set maximum or minimum prices. The government can also choose to increase or decrease taxes on certain products. In this essay we will examine the effects of government intervention from an economic perspective. According to the Financial Mail (2006) In February this year, the inflation rate in Zimbabwe reached the highest level in the world: 782% per annum. It is estimated that by the end of this month, Zimbabwe's annual inflation rate will have exceeded 1,000%, according to calculations by regionally represented financial services group Imara (Mail and Guardian, 2006). As inflation rises at ridiculous rates, the Zimbabwean government is forced to offer some sort of relief to its people. Prices of basic goods such as food and fuel are rising sharply almost daily, while wages have remained more or less the same (Financial mail, 2006). Due to public or rather social concerns, the government was forced to establish price controls on basic necessities such as food, fuel and transportation costs. “A price ceiling is a regulation that makes it illegal to charge a price above a specified level” (Parkin et al., 2006:119). The Zimbabwean government has attempted to cap the price of some basic commodities, such as fuel and food. This means that suppliers cannot set prices higher than the agreed price. For a price cap to be effective according to Parkin et... middle of paper... the country's fortunes. As we have noted in this essay and as outlined by Sloman (1997; 82), price ceilings reduce the quantity produced of an already scarce good. Basic commodities such as food and fuel are already scarce in Zimbabwe, therefore the introduction of price controls will create further shortages and this is the problem that Zimbabwe still experiences today. Financial Mail 10 March 2006 MAKONI, V., 2005. Fuel prices worsen workers' plight. Zimbabwe 8 JulyMULEYA, D., 2006 Inflation in Zimbabwe set to exceed 1000% working day 26 APARKIN, M, POWELL, M and MATTHEWS, K., 2005. Economics (6e) Harlow England: Addison-Wesley .SLOMAN, J., 1997. Economics (3e) London: Prentice HallTAYLOR, AJ, 2006. Desperate Measures for Zim. Financial Mail 24 AprilDesperate measures for Zim