Maximum & Minimum Prices 0.0 / 5 ? EconomicsGovernment intervention in marketsASCIE Created by: cynchuahCreated 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. 1 of 5 Maximum Price Controls (Price Ceiling) ~ r only valid where it is below market equilibrium price. 2 of 5 Impact of government intervention on markets-Maximum Price Controls At price ceiling, excess demand occurs 3 of 5 Minimum Prices Control (Price Floor) A min. allowable price set above equilibrium price is a price floor. 4 of 5 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. 5 of 5
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