Th1.4: Maximum Prices Flashcards
1
Q
What is a maximum price?
A
a legally imposed price for a good that the suppliers cannot charge above
2
Q
What are maximum prices set on?
A
goods with positive externalities
3
Q
Why are they set on food?
A
lack of food will have a negative impact on NHS
4
Q
When are they applied to rents for accommodation?
A
when prices are too high
5
Q
What can they prevent?
A
monopolies from exploiting customers
6
Q
Refer to PP
Look at Graph 22. What does the shaded area show and why?
A
there is excess demand of QD-QS because of the maximum price imposed
