The Control of Prices
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5 Terms
The control of prices (2)
Equilibrium price and the absence of shortages and surpluses
Minimum prices
The control of prices
Minimum prices (5)
justification
effects
cost to the government
dealing with resulting surpluses
example of minimum unit pricing of alcohol: minimum unit pricing versus higher taxes
The control of prices
Maximum prices (4)
justification
effects
dealing with resulting shortages
‘underground’ or ‘shadow’ markets
The control of prices
Maximum prices
dealing with resulting shortages:(6)
first-come, first-served
random ballot
favoured customers
by merit
rule or regulation
rationing
Effect of price control on underground market prices
If dealers buy all the supplies at Pg , the underground market equilibrium price will be Pb .
Note 
Flashcards (38)