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Topic1: Micro ch.3-
Application: Government-Set Prices (Ceilings and Floors)
| Question | Answer |
|---|---|
| ______ are (maximum prices) that can be charged on a good. | Price ceilings |
| ______ are set on goods that are considered to be necessities, but the equilibrium price is so high that many people are unable to purchase the item. | Price ceilings |
| To be effective, the price ceiling must be set (below) the ______. | Equilibrium price |
| When price ceilings are placed on a good, this creates a chronic shortage which ______ | makes it difficult to determine how to ration the limited output for all of the consumers who are willing and able to buy the good. |
| ______ is a persistent, long-term lack of essential goods, resources, or workers, where demand continually exceeds supply for extended periods (months or years). | Chronic shortage |
| signifies a fundamental inability to meet needs, often seen in centrally planned economies or developing nations due to systemic issues, resource constraints, or poor production, affecting everything from food and medicine to teachers and skilled labor. | Chronic shortage ______ |
| The ______ shortages often lead to black markets where the good is sold at a higher price than the price ceiling. | Chronic |
| ______ distort (or alter) the efficient allocation of resources. | Price ceilings |
| ______ is the strategic process of distributing limited resources (like money, time, or inventory) or duties among different people, departments, projects, or purposes to achieve specific goals, ensuring fair or efficient distribution | Allocation |
| ______ prevent the market from reaching the equilibrium price and quantity | Government-set price |
| Alternative methods of rationing must emerge to take the places of the price mechanism. These may be formal (rationing coupons) or informal (lines at the pump). This is an example of a ______ | Price ceiling |
| black markets may emerge to satisfy the unmet consumer demand due to _______ | Price ceilings |
| Rent controls in large cities—intended to keep housing affordable but resulting in housing shortages is an example of ______ | Price ceilings |
| ______ or (price controls), are legal limits (ceilings or floors) on how high or low prices can go, intended to help consumers or producers, but they often cause market imbalances | Government-set prices |
| Price ceilings below equilibrium create ______ (demand > supply), like rent control | Shortages |
| price floors above equilibrium create ______ (supply > demand), like minimum wage or agricultural supports. | Surpluses |
| At this artificially low price, consumers want to buy MORE (higher quantity demanded), but producers are willing to supply LESS (lower quantity supplied). This is a Mechanism of a ______ | Price ceiling |
| A shortage (excess demand) occurs because demand outstrips supply, as seen with rent control leading to housing shortages. This is a result of ______ | Price ceilings |
| On a graph it is also called the Pc. | Price ceiling |
| A price at or above the price floor is ______ | Legal |
| a price below the price floor is ______ | Not legal |
| ______ are the minimum legal price a seller may charge, typically placed above equilibrium. | Price floors |
| A _______ is a minimum price fixed by the government | Price floor |
| On a graph it is also called the Pf. | Price floor |
| When the price floor is above the equilibrium price, a persistent product ______ results. | Surplus |
| ______ result as quantity supplied exceeds quantity demanded | Surpluses |
| Resources are over-allocated to the production of wheat and consumers pay higher than efficient prices for wheat-based goods. This is an example of a ______ | Price floor |
| At this artificially high price, producers want to sell MORE (higher quantity supplied), but consumers are willing to buy LESS (lower quantity demanded). This is a Mechanism of a ______ | Price floor |
| A surplus (excess supply) occurs because sellers offer more than buyers want, as seen with minimum wage (labor surplus/unemployment) or farm price supports (crop surpluses). This is a result of ______ | Price floors |
| Minimum wage is an example of a ______ | Price floor |
| The federal minimum wage, for example, will be below equilibrium in some labor markets (large cities). In that case the ______ has no effect. | Price floor |
Created by:
22gonzalez
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