Ceiling And Floor Price Flashcards
(20 cards)
What is a price ceiling?
A price ceiling is a maximum price set by the government that can be charged for a good or service.
What is a price floor?
A price floor is a minimum price set by the government that must be paid for a good or service.
True or False: A price ceiling can lead to a surplus.
False
What economic condition can result from a price ceiling?
Shortage
Fill in the blank: A price floor is typically used to protect _____ from falling prices.
producers
What is a common example of a price ceiling?
Rent control
What is a common example of a price floor?
Minimum wage
True or False: Price floors help consumers by lowering prices.
False
What happens to supply when a price ceiling is imposed?
Supply decreases.
What happens to demand when a price ceiling is imposed?
Demand increases.
In the case of a price floor, what is the typical outcome for the market?
Surplus
What does the term ‘surplus’ refer to in economics?
A situation where the quantity supplied exceeds the quantity demanded.
What does the term ‘shortage’ refer to in economics?
A situation where the quantity demanded exceeds the quantity supplied.
True or False: Price ceilings can lead to black markets.
True
What is one consequence of a price floor?
Unemployment in the labor market.
What might happen to the quality of goods when a price ceiling is enforced?
Quality may decline.
What is the purpose of implementing a price ceiling?
To make essential goods more affordable for consumers.
What is the purpose of implementing a price floor?
To ensure that producers receive a minimum income.
Multiple Choice: Which of the following is NOT a consequence of a price ceiling? A) Shortages B) Increased quality C) Black markets
B) Increased quality
Multiple Choice: Which of the following is an effect of a price floor? A) Surplus B) Shortage C) Balanced market
A) Surplus
