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Price Support (to keep them up)- All agricultural products with a marketing board (wheat/grains,milk, eggs, chicken) - Minimum wage laws- Prohibition on Sales Rebate (France)- ….. and the list goes on. Chapter 2: Slide 14The Impact of Price ControlQuestion: prove that the rent control implies an inefficiencyFIGURE 2-6Rent ControlsWith the rent control level set at $400 a month, there is an excess demand of 40,000 apartments a month.Chapter 2: Slide 15The Impact of Direct Price Support PoliciesQuestion: prove that the price floor implies an inefficiencyFIGURE 2-7A Price Support inthe Butter MarketFor a price support to have any impact, it needs to be set above the market-clearing price. Its effect is to create excess supply, which the government then purchases.
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