2.5
What causes market equilibrium?
A price ceiling
What causes market disequilibrium?
A price floor
Does quantity demanded increase or decrease, relative to market equilibrium?
Relative to market equilibrium, quantity demanded decreases.
Does quantity demanded increase or decrease, relative to market equilibrium?
Relative to market equilibrium, quantity demanded increases.
Does quantity supplied increase or decrease, relative to market equilibrium?
Relative to market equilibrium, quantity supplied decreases.
Does quantity supplied increase or decrease, relative to market equilibrium?
Relative to market equilibrium, quantity supplied increases.
Explain some problems the government must solve, as a result of the effects of a price ceiling.
Some of the problems the government must solve, as a result of the effects of a price ceiling, is who will end up getting the product. From this, they can incorporate the price rationing systems and/or the non-price rationing systems. On the other hand they will also have to enforce the price ceiling if there were to be an appearance of an illegal market.
Explain some problems the government must solve, as a result of the effects of a price floor.
Some problems the government must solve, as a result of the effects of a price floor is that the government will have to buy a surplus of goods from either a store or sell goods to other countries. On the other hand, in order to keep the economy stable they would have to use the goods efficiently.
What is the result of a price ceiling?
The result of a price ceiling is that the quantity demanded will be greater than the quantity supplied whereas the disequilibrium and market shrink. On the other hand, the result of the price ceiling also causes a shortage.
What is the result of a price floor?
The result of a price floor is that there is less demand due to the increases within price whereas the price floor will lead to a surplus.
When the government sets a price ceiling, who are they trying to protect?
they are trying to protect consumers from being charged a high price, usually for a necessary good or service.
When the government sets a price floor, who are they trying to protect?
they are trying to protect the producers of a specific market.
A _________________ is a legal maximum price for a good
price ceiling
Rent control is an example of _______. (a price floor or price ceiling?)
price ceiling
A ________________ is a legal minimum price for a good.
price floor
Minimum wage is an example of ______. (a price floor or a price ceiling?)
price floor