maximum price for a good set by government
How does a price ceiling affect market equilibrium?
maximum price set above equilibrium price has no effect maximum price set below equilibrium creates shortage
minimum price for a good set by government
How does a price floor affect market equilibrium?
minimum price set above equilibrium price creates surplus minimum price set below equilibrium price has no effect
What are maximum prices generally placed on?
goods considered to be necessities
maximum price deadweight welfare loss
C + E
maximum price black market price
maximum price illegal black market profit
B + D
maximum price post-black market consumer surplus
what are minimum prices a trade off between?
market efficiency and desireable socio-political policies
what is the supply curve for a fixed quantity of a good?
vertical (perfect inelasticity of supply) momentary supply curve