Chap. 6 Sect. 3 Analyze the effects of price ceilings and price floors.

The Gov’t & Price Control Two ways a gov’t can intervene in the market to control prices – Price Ceilings and Price Floors. Price Ceiling – a maximum price for a good or service that is set by the gov’t. Usually set for items that are seen as necessary that might otherwise become too expensive. Ex. Rent Control in NYC Costs of Ceilings – Shortages ,Poor Maintenance Price Gouging - Price Ceilings rent controls- price ceiling Equilibrium

The Gov’t & Price Control cont. Price Floors – a minimum price for a good or service that is set by the gov’t. Usually set when the gov’t wants to ensure that the sellers get a minimum reward for their efforts. Ex. Min. Wage Price Floors can lead to a surplus and waste The U.S. used to set price floors for many agricultural products, and would then buy the surplus from the farms, now it is done through subsidies with less waste. minimum wage- price floors

Minimum Wage and the Labor Market

Minimum Wage cont. Minimum Wage over time inflation calculator Minimum Wage Stats 30 Days Minimum Wage