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Price floor quizlet.
They don t face incentives to cut costs by using more efficient production methods because the high price offers them protection from lower cost competitors.
The price ceiling is below the equilibrium price.
Quantity demanded at the price ceiling exceeds the amount at the equilibrium price and quantity supplied is less than the amount at the equilibrium price.
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A government law that makes it illegal to charger lower than the specified price.
A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital.
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If a price floor is imposed at 15 per unit when the equilibrium market price is 12 there will be.
But this is a control or limit on how low a price can be charged for any commodity.
Like price ceiling price floor is also a measure of price control imposed by the government.
Price floors and price ceilings.
Two things can happen when a price floor is implemented.
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Perhaps the best known example of a price floor is the minimum wage which is based on the normative view that someone working full time ought to be able to afford a basic standard of living.
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The federal minimum wage at the.
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It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price.
Which of the following is an accurate statement about the consequence of a binding price floor.
Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.
In this case there is no effect on anything and the equilibrium price and quantity stay the same.
The result of a binding price floor is.
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