Minimum And Maximum Prices Flashcards
1
Q
Minimum price
A
Suppliers can put sell the product legally at a lower price (the floor of the market)
2
Q
Uses of minimum prices (4)
A
Tackling negative externalities
Tackling info gaps
Reduces volatile prices
Reduces poverty and inequality
3
Q
Maximum price
A
Government setting a limit on the price of a G/S with the aim of reducing price
4
Q
Unintended consequences
A
Outcomes that are not foreseen and intended when a policy is put in place. For example a maximum price could create a black market for the good
