chapter 6. government interferes to keep some prices from going to high price ceiling- legal...
TRANSCRIPT
Demand, Supply, and Prices
Chapter 6
Government interferes to keep some prices from going to high
Price ceiling- legal maximum price a seller may charge for a product◦ Set below the equilibrium price, so shortage
results
Intervention in the Price System
Government intervenes to increase income to certain producers
Price Floor- legal minimum price buyers may pay for a product
Various programs protect agricultural products◦ Encourage farmers to produce abundant supply of
food
Setting Price Floors
Minimum Wage- least amount employer may pay for one hour of work◦ Set by government
If set above equilibrium price for job, employers may employ fewer workers◦ Unemployment increases
If set below equilibrium price, minimum wage has no effect
Minimum Wage as Price Floor
In national emergency, government may distribute products, resources
Rationing- way of allocating products using factors other than price
Black Market- illegal buying and selling of products
Violates price controls, rationing
Rationing Resources and Products
Vocabulary
Price Ceiling legal maximum price a seller may charge for a product
Price Floor legal minimum price buyers may pay for a product
Minimum Wage least amount employer may pay for one hour of work
Rationing way of allocating products using factors other than price
Black Market illegal buying and selling of products