1. Chapter 6

2.  Government interferes to keep some prices from going to high  Price ceiling- legal maximum price a seller may charge for a product ◦ Set below the equilibrium price, so shortage results

3.  Government intervenes to increase income to certain producers  Price Floor- legal minimum price buyers may pay for a product  Various programs protect agricultural products ◦ Encourage farmers to produce abundant supply of food

4.  Minimum Wage- least amount employer may pay for one hour of work ◦ Set by government  If set above equilibrium price for job, employers may employ fewer workers ◦ Unemployment increases  If set below equilibrium price, minimum wage has no effect

5.  In national emergency, government may distribute products, resources  Rationing- way of allocating products using factors other than price  Black Market- illegal buying and selling of products  Violates price controls, rationing

6. Vocabulary Price Ceilinglegal maximum price a seller may charge for a product Price Floorlegal minimum price buyers may pay for a product Minimum Wageleast amount employer may pay for one hour of work Rationingway of allocating products using factors other than price Black Marketillegal buying and selling of products