Price Controls

These flashcards cover key concepts related to price controls and their impact on markets, including definitions of essential terms and legislation.

Price Control

A government-imposed limit on the prices that can be charged for goods and services.

Price Ceiling

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

Price Floor

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

Binding Constraint

A situation where a price ceiling or price floor is set below or above the equilibrium price, leading to market shortages or surpluses.

Shortage

A situation where quantity demanded exceeds quantity supplied at a given price.

Surplus

A situation where quantity supplied exceeds quantity demanded at a given price.

Rent Control

Local regulations that limit how much landlords can charge for renting out housing.

Minimum Wage

The lowest price for labor that any employer is legally allowed to pay.

Inequities

Unfair or unjust economic disparities that result from certain market conditions.

Rationing Mechanisms

Methods used to allocate scarce goods when there is a shortage.

Elasticity

A measure of how much quantity demanded or supplied responds to changes in price.

Unemployment

The situation in which individuals who are capable of working are unable to find a job.