Price Floor Quizlet

But this is a control or limit on how low a price can be charged for any commodity. A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital. Consequences of price floors.

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Start studying econ quiz 6.

Price floor quizlet. In this case there is no effect on anything and the equilibrium price and quantity stay the same. Binding price floors encourage the formation of a black market. Learn vocabulary terms and more with flashcards games and other study tools. The result of a binding price floor is.

Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness. Learn vocabulary terms and more with flashcards games and other study tools. Like price ceiling price floor is also a measure of price control imposed by the government. If a price floor is imposed at 15 per unit when the equilibrium market price is 12 there will be.

Final exam ch. 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. 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. The federal minimum wage at the.

Two things can happen when a price floor is implemented. The price ceiling is below the equilibrium price. Start studying economics 4. Which of the following is an accurate statement about the consequence of a binding price floor.

Choose from 500 different sets of price floor flashcards on quizlet. 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. A government law that makes it illegal to charger lower than the specified price.

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. Price floors and price ceilings. 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. Learn price floor with free interactive flashcards.