chaoter 6 econ

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Last updated 8:40 PM on 10/7/26
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13 Terms

1
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Price ceilings

The legal maximum on price at which a food can be sold

2
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What is the affect of a price ceiling

Shortage

3
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Results of a price ceiling

  • people wait in lines

  • Favoritism

  • Rationed quantities

  • Black markets


4
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Binding price ceiling

A price ceiling below the price equilibrium

5
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Non binding price ceiling

A price ceiling above the price equilibrium

6
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Price ceilings protect …

Consumers

7
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Price floors protect…

Producers

8
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Price floor

A legal minimum on the price at which a good can be sold

9
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Binding price floor

A price floor above the price equilibrium

10
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Non binding price floor

A price floor below the price equilibrium

11
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Price floors cause a…

Surplus

12
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Results of a price floor


gov:

  • buys the surplus

  • Restricts supply

  • Increase demand


13
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Problems with price floors


  • not efficient

  • Consumers are the losers ( they pay higher prices)

  • Increase in foreign trade so we place tariffs