5. Government Intervention Flashcards
1
Q
Name
A
Tags
2
Q
Price Ceiling
A
Price Ceiling represents a maximum allowed price imposed by the government.
3
Q
Price Floor
A
Price Floor represents a minimum allowable price imposed by the government.
4
Q
Deadweight Loss
A
Deadweight loss is the loss in economic surplus due to the market being prevented from reaching the equilibrium price and quantity where marginal benefit (MB) equals marginal cost (MC) .
5
Q
Taxation
A
Unlike the price ceiling and the price floor, a tax generates tax revenues. Tax revenues can be used to redistribute wealth within a society.
6
Q
Subsidy
A
- opposite of a tax -it is the government cost to assist certain groups of consumers/ producers (makes certain goods more affordable for certain groups of consumers)
