Price Controls Flashcards
1
Q
Reasons for price ceilings? (2)
A
- to encourage consumption
- affordability
2
Q
Reasons for price floors? (3)
A
- discourage demerit goods
- to guarantee producer revenue
- minimum wage
3
Q
Price ceilings impact of price and quantity sold?
A
- lower price
- more demanded but less produced (shortage)
4
Q
Price floors impacts on price and quantity sold?
A
- higher price
- more supplied but less demanded (a surplus)
5
Q
Applications of minimum prices?
A
Cigarettes, alcohol, sugar
Farmers, fisherman
Minimum wage
6
Q
Applications of maximum price?
A
Housing price
Transport
Medicine
Energy (has, water, electric)
7
Q
Definition of indirect tax?
A
An indirect tax is a tax on expenditure (goods and services) rather than a tax on income and wealth.
