1 - Gov Intervention - Min Price Flashcards
(5 cards)
1
Q
What’s a min price?
A
Price set above equilibrium set by gov to prevent market price from falling below a certain level
2
Q
Benefits of min price
A
- support incomes and jobs of producers
- encourage innovation
- discourage demerit goods
- prevent consumers using monopsony powers
3
Q
Consequences of min price
A
- surplus of good
- disequilibrium at min price
- excess supply cant be removes, lost incentivising and signalling functions
- gov failure
4
Q
Examples of min prices
A
- alcohol
- NMW
5
Q
Problems with min prices
A
- excess supply needs addressing
- suppliers may cut supply, output and jobs - better alternative policies eg. Subsidies
