Price Controls and Market Interventions

These flashcards cover key vocabulary and concepts related to price controls, market interventions, and their economic implications as discussed in the lecture notes.

Market Intervention

Government actions taken to affect the market outcome, such as price controls and quantity controls.

Price Controls

Legal restrictions on how high or low a market price may go, including price ceilings and price floors.

Price Ceiling

A maximum price that sellers are allowed to charge for a good or service, usually set below the equilibrium price.

Price Floor

A minimum price buyers are required to pay for a good or service, usually set above the equilibrium price.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.

Shadow Market

A market where goods or services are bought and sold illegally, typically because the price or service is prohibited.

Quota

An upper limit set by the government on the quantity of some good that can be bought or sold; also referred to as a quantity control.

Inefficient Allocation

When resources are not allocated in the most productive manner, often due to price controls.

Wasted Resources

The expenditure of money, effort, and time that does not result in productive outcomes, often due to inefficiencies in the market.

Rent Control

Government regulation that limits the amount landlords can charge for renting residential properties, often leading to housing shortages.