Force some firms in this industry to go out of business.
An effective price floor will quizlet.
Result in a product surplus.
Government enforce price floor to oblige consumer to pay certain minimum amount to the producers.
Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.
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However price floor has some adverse effects on the market.
An effective price floor will.
Surplus of the good if minimum wages are set above the equilibrium wage in the market then the number of workers hired will be the number of people who are willing to work at the prevailing wage.
Price that is typically above the equilibrium price.
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The lowest price that may be charged by law.
Result in a product shortage.
Result in a product shortage.
Price floors and ceiling prices.
Decreased total surplus binding price floors typically cause excess supply and decreased total economic surplus.
What is a price floor.
Consequences of price floors.
Result in a product surplus.
When people feel that prices are unfairly low the government establishes a price floor above the free market.
Government set price floor when it believes that the producers are receiving unfair amount.
An effective ceiling price will.
Effect of price floor.
Price floor is enforced with an only intention of assisting producers.
They don t face incentives to cut costs by using more efficient production methods because the high price offers them protection from lower cost competitors.
An effective price floor will.
The effective price ceiling will also decrease the price for consumers but any benefit gained from that will be minimized by the decreased sales due to the drop in supply caused by the lower price.
An effective price floor would result in a n.
Chapter 7 price ceilings price floors and taxes.
