Econ Quiz 10/30 Flashcards
Unit 7
1
Q
Price controls
A
legally mandated prices
2
Q
Price ceiling
A
legal maximum price (rent control)
-stops upward pressure on price
3
Q
Price floor
A
legal minimum (minimum wage)
-stops downward pressure on price
4
Q
2 Primary consequences of a price ceiling
A
shortages and dead weight loss
5
Q
2 Primary consequences of a price floor
A
surplus and dead weight loss
6
Q
Why do we not observe substantial unemployment because of minimum wage?
A
-demand may be inelastic
-minimum wage may be close to P*
-difficult to measure
7
Q
Price floor on labor
A
minimum wage
-sellers are individuals and buyers are firms
8
Q
Unemployment
A
a surplus in the labor market
