Price Floor Quizlet

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

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The federal minimum wage at the.

Price floor quizlet.

Like price ceiling price floor is also a measure of price control imposed by the government. The result of a binding price floor is. Start studying economics 4. Learn vocabulary terms and more with flashcards games and other study tools.

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. A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital. Choose from 500 different sets of price floor flashcards on quizlet. Binding price floors encourage the formation of a black market.

But this is a control or limit on how low a price can be charged for any commodity. The price ceiling is below the equilibrium price. Two things can happen when a price floor is implemented. Price floors and price ceilings.

If a price floor is imposed at 15 per unit when the equilibrium market price is 12 there will be. Learn vocabulary terms and more with flashcards games and other study tools. A government law that makes it illegal to charger lower than the specified 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.

Learn price floor with free interactive flashcards. Learn vocabulary terms and more with flashcards games and other study tools. 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. Final exam ch.

Start studying econ quiz 6. 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. Consequences of price floors. Which of the following is an accurate statement about the consequence of a binding price floor.