Price Floor Quizlet

Consequences of price floors.

Price floor quizlet.

Choose from 500 different sets of price floor flashcards on quizlet. 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. Learn vocabulary terms and more with flashcards games and other study tools. Quantity supplied at the price floor exceeds the amount at the equilibrium price and quantity demanded is less than the amount at the equilibrium price.

Which of the following is an accurate statement about the consequence of a binding price floor. Final exam ch. They don t face incentives to cut costs by using more efficient production methods because the high price offers them protection from lower cost competitors. The result of a binding price floor is.

A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital. If a price floor is imposed at 15 per unit when the equilibrium market price is 12 there will be. Quantity demanded at the price ceiling exceeds the amount at the equilibrium price and quantity supplied is less than the amount at the equilibrium price. Start studying econ quiz 6.

But this is a control or limit on how low a price can be charged for any commodity. Binding price floors encourage the formation of a black market. Like price ceiling price floor is also a measure of price control imposed by the government. Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.

A government law that makes it illegal to charger lower than the specified price. In this case there is no effect on anything and the equilibrium price and quantity stay the same. Learn vocabulary terms and more with flashcards games and other study tools. Two things can happen when a price floor is implemented.

Learn price floor with free interactive flashcards. Perhaps the best known example of a price floor is the minimum wage which is based on the normative view that someone working full time ought to be able to afford a basic standard of living. Start studying economics 4. The federal minimum wage at the.