Chapter 5 and 7 Government Controls Flashcards
1
Q
price ceilings
A
place an upper limit on price of a good lead to: inefficiently low quantity inefficient allocation to consumers wasted resources inefficiently low quality
2
Q
price floor
A
set a lower limit on price of a good, lead to:
deadweight loss from inefficiently low quantity,
inefficient allocation of sales among sellers,
wasted resources,
inefficiently high quality
3
Q
quantity control, or quota
A
upper limit on the quantity of good bought or sold
4
Q
license
A
gives owner right to supply a good
5
Q
quota rent
A
difference between demand and supply price at the quota limit, equal to the market price of the license
6
Q
incidence of a tax
A
measure of who really pays it, depends on elasticity
7
Q
deadweight loss
A
larger when supply is elastic. smaller when supply is inelastic
