Minimum Price Schemes Flashcards
1
Q
Why are minimum price schemes imposed?
A
to reduce the consumption of demerit goods
2
Q
What affects whether the minimum price scheme will work?
A
- inelastic PED
- ^^ producers could gain from increase in - total rev
- set at right level?
3
Q
What are bad things about minimum price schemes?
A
- regressive - will affect poor more, increasing income inequality
- black market
