Foundations of Microeconomics: Price Ceilings and Floors

These flashcards cover key vocabulary terms related to price ceilings and floors, including their definitions and implications in microeconomics.

Price Ceiling

A government regulation that places an upper limit on the price at which a good, service, or factor of production may be traded.

Rent Ceiling

A specific type of price ceiling that makes it illegal to charge more than a specified rent for housing.

Housing Shortage

A situation where the quantity of housing demanded exceeds the quantity supplied due to a rent ceiling.

Black Market

An illegal market that operates alongside a government-regulated market, where goods are traded at prices above the legally established ceilings.

Minimum Wage

A government regulation that makes hiring labor for less than a specified wage illegal.

Unemployment

A situation where the quantity of labor supplied exceeds the quantity demanded, often due to a minimum wage set above the market equilibrium.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable due to market distortions like price ceilings or floors.

Producer Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Production Quota

A government regulation that places an upper limit on the quantity that may be supplied in a market.