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The Gov’t & Price Control

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Presentation on theme: "The Gov’t & Price Control"— Presentation transcript:

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

2 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 Equilibrium

3 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.

4 Stossel clips gouging - price ceilings rent control- price ceiling
minimum wage-price floors


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