price control and price floors Flashcards
1
Q
What are price controls
A
Price controls are government regulated prices that set prices either above or below the equilibrium price
2
Q
What is a price ceiling
A
A legislated maximum price that sellers are allowed to charge in the market. Price ceiling is designed to benefit consumers by keeping the price below the market clearing price
3
Q
What is a price floor
A
A legislated minimum price that sellers are allowed to charge the market. Desinged to help producers
4
Q
What is a subsidy
A
Grant paid to a producer with a purpose of reducing costs and increasing output
