> The units (currency) are all traveling in a circle, farmer -> feed store owner -> butcher -> farmer -> feed store owner -> butcher -> farmer Note that price

> The units (currency) are all traveling in a circle, farmer -> feed store owner -> butcher -> farmer -> feed store owner -> butcher -> farmer Note that price controls work iff you can dictate prices for each transaction - the price for meat and feed. Actually, in this case the feed store owner muddies the waters, as he is not a direct source of production. If you just think of a cow farmer selling cows to a farmer in exchange for grain, and the prices for the cows to grain is fixed by the state, everything works for a while. Until the farmer realizes that he needs fertilizer for his fields to produce grain. He goes to the fertilizer producer, who is NOT under the state, and attempts to buy the fertilizer for the state-set price. That price is either going to be too high, in which case the fertilizer producer sells the farmer all he needs and more, or the price is going to be too low, in which case the farmer gets none. By "too high" and "too low" I mean the price of fertilizer set by the market, the price where you can both buy and sell fertilizer.