Price Floor Quizlet

But this is a control or limit on how low a price can be charged for any commodity.

Price floor quizlet.

Start studying economics 4. Start studying econ quiz 6. 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. Final exam ch.

Binding price floors encourage the formation of a black market. Learn vocabulary terms and more with flashcards games and other study tools. Learn vocabulary terms and more with flashcards games and other study tools. A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital.

Like price ceiling price floor is also a measure of price control imposed by the government. Learn price floor with free interactive flashcards. The federal minimum wage at the. 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 price ceiling is below the equilibrium price. Choose from 500 different sets of price floor flashcards on quizlet. Learn vocabulary terms and more with flashcards games and other study tools. If a price floor is imposed at 15 per unit when the equilibrium market price is 12 there will be.

A government law that makes it illegal to charger lower than the specified price. 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. 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. Price floors and price ceilings.

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. In this case there is no effect on anything and the equilibrium price and quantity stay the same. Consequences of price floors. Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.