Maximum Price Flashcards
1
Q
What is a maximum price
A
A fixed price enacted by the government usually set below the equilibrium market price
2
Q
What’s the aim of maximum prices
A
Increase affordability of necessity goods and services
3
Q
How does a maximum price affect price
A
Lower
4
Q
How does a maximum price affect demand
A
Expansion
5
Q
How does a maximum price affect supply
A
Contraction
6
Q
What does a maximum price create
A
Excess demand
7
Q
What do key stakeholders think of maximum prices
A
Consumers - benefit as long as they can access the market, but large amount can’t (black markets)
Producers - lower supply, fall in revenue and surplus
Government - if hitting aim, concerned about impact on producer, excess demand and black markets
