Compare and contrast a price ceiling and a price floor
What will be an ideal response?
A price ceiling is the maximum legal price that can be charged. A price floor is the minimum legal price that can be charged. For a price ceiling or a price floor to have an effect, they must make the equilibrium price illegal. So, an effective price ceiling is set below the equilibrium price while an effective price floor is set above the equilibrium price. A price ceiling creates a shortage of the good while a price floor creates a surplus. Both create an inefficient market outcome because the marginal benefit of the last unit consumed no longer equals the marginal cost of the last unit produced.
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Recent proposals for immigration reform that have drawn intense political fire include the following, except:
A. Increase fines for employers who knowingly hire illegal immigrants B. Implement a new amnesty program for illegal immigrants C. Shift immigration quotas away from family ties toward education-level and skills D. Create a guest-worker program with a tight cap
If the CPI basket costs $35 in the base period but costs $42, what is the CPI in the next period?
A) 83.3 B) $42 C) 20 percent D) 120
If income increases by $100 and saving increases by $25, the slope of the consumption function equals _____
a. 1/4 b. 1/5 c. 1/2 d. 3/4 e. 3/5
According to the equation of exchange, if real GDP is $2 trillion and the money supply is $0.5 trillion, the velocity of money: a. must be 4
b. must be 1/4. c. must be 4 trillion. d. must be 1/4 trillion. e. cannot be determined unless we know the price level.