price controls and quotas Flashcards
1
Q
A
2
Q
define price controls
A
how low/high a market price can go
3
Q
define price ceiling
A
- max price sellers can put for a good/service
- below equilibirum
4
Q
define price floor
A
-min price buyers are required to pay for good/services (above equilibirum)
5
Q
what happens when price ceiling is set above equilibirum
A
- will have no effect (nonbinding)
6
Q
what happens when price ceiling is set belown equilibirum
A
-has an effect
- binding or effective
7
Q
if prices are lower than market price
A
- shortages
- this is because quanity demanded isn bigger than quantity supplied.
8
Q
define deadwight loss
A
- loss in total surplus that happens when action/policy reduces quantitiy transacted below efficient market equibilium quantity.
9
Q
A
