ECO 1002 Lecture 8: ECO 4.1
Document Summary
Attempt to set, or manipulate, prices through government involvement in the market. Meant to ease perceived burdens on the population: price ceiling. Legally established maximum price for a good or service: price floor. Legally established minimum price for a good or service. Price controls, historically: price controls in ancient egypt. Farmers revolted and economy collapsed: price ceiling on grain in ancient greece. Supply of grain disappeared: throughout history, price controls. More recent price controls: 1941: u. s. office of price administration. Price controls after wwii resulted in black markets: black markets. Illegal markets that arise when price controls are in place. Best known example is during prohibition: other ways to circumvent price controls. The reduction in economic surplus (i. e. the loss to the economy) resulting from a market not being in competitive equilibrium. (the value of the transactions that didn"t happen) Case studies on price ceilings: rent control. Price ceiling on apartments or housing: goal:
