Price Controls government regulations to set either a maximum or minimum price for a product Price Ceiling a government regulation stipulating the maximum.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Price Controls Price Controls
government regulations to set either a maximum or minimum price for a product
Price Ceiling a government regulation stipulating the maximum
price that can be charged for a product
Price Floor a government regulation stipulating the minimum price
a) Suppose the government introduces a price ceiling that is 20 cents different from the present equilibrium price. Would the result be a surplus or a shortage? Of what quantity?
b)If an illegal marketwere to develop, what would be the maximum illegal market price?
a) In equilibrium, what is the total revenue received by producers?
b) Suppose that government imposes a price floor of $4 per kilo. What quantity will be demanded? What quantity will farmers produce? What quantity will government buy?