Learn vocabulary terms and more with flashcards games and other study tools.
In order to be binding a price floor quizlet.
A price floor is an established lower boundary on the price of a commodity in the market.
In order for a price for it to be binding it must be set.
Above the equilibrium price.
A price ceiling is the legal maximum price at which a good can be sold while a price floor is the legal minimum price at which a good can be sold.
The effect of government interventions on surplus.
Note that the price floor is below the equilibrium price so that anything price above the floor is feasible.
It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price.
Another way to think about this is to start at a price of 100 and go down until you the price floor price or the equilibrium price.
Price and quantity controls.
Price ceilings and price floors.
Graphical representation of tax on buyers and tax on sellers.
B must lie below the free market equilibrium price.
A price ceiling is only binding when the.
C must coincide with the free market equilibrium price.
Like price ceiling price floor is also a measure of price control imposed by the government.
In order for a price floor to be effective it must be set.
How price controls reallocate surplus.
Start studying econ chapter 4 price ceilings and price floors.
The latter example would be a binding price floor while the former would not be binding.
D must be high enough for firms to earn a profit.
Consequences of price floors.
32 in order to be binding a price floor a must lie above the free market equilibrium price.
Above the equilibrium price.
Price floor is legally imposed.
Minimum wage and price floors.
If the price floor is under the equilibrium price economic effects of rent control and minimum wage short run long run per unit tax on buyers sellers and market outcome.
Governments usually set up a price floor in order to ensure that the market price of a commodity does not fall below a level that would threaten the financial existence of producers of the commodity.
This is the currently selected item.
Taxation and dead weight loss.
Types of price floors.
Example breaking down tax incidence.
Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.
Binding price ceiling price ceiling set below the equilibrium.
Attempts to set or manipulate prices through government involvement and market and are meant to ease perceived burdens on the population.
