Econ notes 6 supply demand and govt policies

Econ notes 6 supply demand and govt policies - Econ notes;...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Econ notes; Supply, Demand and government policies 17/09/2007 13:13:00 Controls on Price o Price Ceiling a legal maximum on the price at which a good can be sold o Price Floor a legal minimum at which a good can be sold How Price Ceilings affect market outcomes o Non binding when a price ceiling is set above the equilibrium price it has no effect on the market of a good because the good will move towards equilibrium o Binding when a ceiling is set below the equilibrium restricts the markets ability to level out supply and demand. There will be higher demand than producers are willing to supply o QuickTime fi and a TIFF (Uncompressed) decompressor are needed to see this picture. o This naturally leads to a shortage. When there is a shortage the good must be rationed in some way either by lines which are inefficient or seller bias which is unfair o In a free market the rationing system is efficient and fair, anyone who wants to buy something at a given price is able to do so o A binding price ceiling also results in less of the good being available...
View Full Document

Page1 / 7

Econ notes 6 supply demand and govt policies - Econ notes;...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online