Maximum & Minimum Prices

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  • Created by: cynchuah
  • Created on: 08-06-16 05:11
Maximum & Minimum Price Controls
In some markets, govs. intervene to keep prices of certain items higher/lower than wat would result from market finding its own equilibrium price.
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Maximum Price Controls (Price Ceiling)
~ r only valid where it is below market equilibrium price.
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Impact of government intervention on markets-Maximum Price Controls
At price ceiling, excess demand occurs
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Minimum Prices Control (Price Floor)
A min. allowable price set above equilibrium price is a price floor.
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Impact of government intervention on markets-Minimum Prices Control: Government might set Minimum prices
To raise incomes for producers such as farmers & protect them from frequent fluctuations in commodity market.
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Other cards in this set

Card 2

Front

~ r only valid where it is below market equilibrium price.

Back

Maximum Price Controls (Price Ceiling)

Card 3

Front

At price ceiling, excess demand occurs

Back

Preview of the back of card 3

Card 4

Front

A min. allowable price set above equilibrium price is a price floor.

Back

Preview of the back of card 4

Card 5

Front

To raise incomes for producers such as farmers & protect them from frequent fluctuations in commodity market.

Back

Preview of the back of card 5

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