ECO100Y1 Chapter Notes - Chapter 3: Price Ceiling, Price Floor
Document Summary
Draw the changes to find what increases/decreases and what stays the same. 3. 2: how well do markets work: markets do not always adjust as quickly as we would like, markets do not always produce equitable results, competitive markets may not exist for some goods or services. Price controls: governmental regulations which set a max or min price for a product. Price ceiling is the maximum price a product can be sold at. The government thinks that some necessary products are too high priced. Causes shortage, since lower prices attract more consumers. Four different shortage allocation methods: the market, first come, first served (unfair for people who work, producers preferences (racism, sexist etc. , rationing (some people might want different ratios of items) Black market: where an item that is at great demand can be bought, but for a high price. Price floor is the minimum price a product can be sold at.
