Policy Levers: Price Controls

A series of flashcards summarizing key vocabulary and concepts related to price controls, zoning, rent control, and minimum wage from introductory microeconomics.

Price Controls

Policies that impose legal limits on the market prices of particular goods or services.

Price Floor

Establishes a legal minimum price; prices below the floor are illegal.

Price Ceiling

Establishes a legal maximum price; prices above the ceiling are illegal.

Binding Price Floor

A price floor set above the equilibrium price, leading to potential surplus.

Non-Binding Price Floor

A price floor set below the equilibrium price, which has no effect on the market.

Binding Price Ceiling

A price ceiling set below the equilibrium price, leading to potential shortages.

Non-Binding Price Ceiling

A price ceiling set above the equilibrium price, which has no effect on the market.

Deadweight Loss (DWL)

The loss of economic efficiency when the equilibrium outcome is not achievable.

Zoning Policies

Regulations that restrict the type and intensity of development in certain areas.

Rent Control

A price ceiling on rental units intended to keep rent affordable.

Minimum Wage

A price floor for wage labor, intended to increase living standards of the working poor.

Government Cheese

A form of surplus dairy products distributed by the government, often resulting from price floor policies.

Black Market

An illegal market where goods are sold at prices above legal limits.

Price-Gouging Laws

Laws that set price ceilings on essential goods during emergencies to prevent price hikes.

Total Surplus (TS)

The sum of consumer surplus and producer surplus in an efficient market.

Consumer Surplus (CS)

The difference between what consumers are willing to pay and what they actually pay.

Producer Surplus (PS)

The difference between what producers are paid and the minimum they are willing to accept.

Height Restrictions

Zoning laws that dictate the maximum height of buildings in a specific area.