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Give an example of a price ceiling and an example of a price floor?
Wiki User
∙ 11y ago
Price cealing: rent control
Price floor: minimun wage
Wiki User
∙ 11y ago
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Give an example of a price floor and a price ceiling and the purpose of the controls?
an example of a price floor is the minimum wage
What is an economic floor?
Price FloorsA price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low. The most common price floor is the minimum wage--the minimum price that can be payed for labor. Price floors are also used often in agriculture to try to protect farmers. For a price floor to be effective, it must be set above the equilibrium price. If it's not above equilibrium, then the market won't sell below equilibrium and the price floor will be irrelevant.Drawing a price floor is simple. Simply draw a straight, horizontal line at the price floor level. This graph shows a price floor at $3.00. You'll notice that the price floor is above the equilibrium price, which is $2.00 in this example.A few crazy things start to happen when a price floor is set. First of all, the price floor has raised the price above what it was at equilibrium, so the demanders (consumers) aren't willing to buy as much quantity. The demanders will purchase the quantity where the quantity demanded is equal to the price floor, or where the demand curve intersects the price floor line. On the other hand, since the price is higher than what it would be at equilibrium, the suppliers (producers) are willing to supply more than the equilibrium quantity. They will supply where their marginal cost is equal to the price floor, or where the supply curve intersects the price floor line.As you might have guessed, this creates a problem. There is less quantity demanded (consumed) than quantity supplied (produced). This is called a surplus. If the surplus is allowed to be in the market then the price would actually drop below the equilibrium. In order to prevent this the government must step in. The government has a few options:1. They can buy up all the surplus. For a while the US government bought grain surpluses in the US and then gave all the grain to Africa. This might have been nice for African consumers, but it destroyed African farmers.2. They can strictly enforce the price floor and let the surplus go to waste. This means that the suppliers that are able to sell their goods are better off while those who can't sell theirs (because of lack of demand) will be worse off. Minimum wage laws, for example, mean that some workers who are willing to work at a lower wage don't get to work at all. Such workers make up a portion of the unemployed (this is called "structural unemployment").3. The government can control how much is produced. To prevent too many suppliers from producing, the government can give out production rights or pay people not to produce. Giving out production rights will lead to lobbying for the lucrative rights or even bribery. If the government pays people not to produce, then suddenly more producers will show up and ask to be payed.4. They can also subsidize consumption. To get demanders to purchase more of the surplus, the government can pay part of the costs. This would obviously get expensive really fast.Although some of those ideas may sound stupid, the US government has done them. In the end, a price floor hurts society more than it helps. It may help farmers or the few workers that get to work for minimum wage, but it only helps those people by hurting everyone else. Price floors cause a deadweight welfare loss.A deadweight welfare loss occurs whenever there is a difference between the price the marginal demander is willing to pay and the equilibrium price. The deadweight welfare loss is the loss of consumer and producer surplus. In other words, any time a regulation is put into place that moves the market away from equilibrium, beneficial transactions that would have occured can no longer take place. In the case of a price floor, the deadweight welfare loss is shown by a triangle on the left side of the equilibrium point, like in the graph. The area of the triangle is the amount of money that society loses.
Why has Costco been successful?
Costco has been successful because they sell a lot of something at a pretty low price. I disagree to shopping there because they give you too much for example: instead of a regular sized ketchup they give you 2 huge ones; it still has a expiration!
What is the core concept of marketing give you explanations with example?
give me answer of this question with example and simple word i am very thankful to you sir
How long does a product have to be at full price before it can be reduced in price?
That would depend on the laws of your country and as you have omitted this information in your question, we can not give you a precise answer.
Give an example of a price floor and a price ceiling and the purpose of the controls?
an example of a price floor is the minimum wage
What does the math symbol floor mean?
The floor and ceiling functions give you the nearest integer up or down.Example: What is the floor and ceiling of 2.31?The Floor of 2.31 is 2The Ceiling of 2.31 is 3
Can you give an example of a simple sentence using above?
The roof is above the ceiling
Can you give an example of acrostic of the word HEALTHY?
share price
What are some companies that deal with drop ceiling installation?
Some of the companies that deal with drop ceiling instalation are Home depot, Reno Depot, Rona, Home Hardware and Home Owners. They will prepare a plan and will give you the price for the services.
Can you give me a sentence debt ceiling?
A debt ceiling can be described as the maximum limit that company, organization, or government agency can afford to incur debt. Example sentence: My personal debt ceiling is around a thousand dollars.
How many stairs are in a standard spiral staircase?
Do not confuse stairs with steps or treads! All depends on floor to floor height. Floor to ceiling 8 ft. + floor thickness (8 to 12 in.) would give you approx. 10 or 11 steps. but my answer would have to be 1 (one), there is one stair in a standard spiral staircase
Why do they not put lights in the living room?
You can light a living room with wall sconces, ceiling lights, table lamps and floor lamps. If lighting fixtures are not installed in your living room, you have the freedom to decorate for task lighting and interior design. Wall lights and floor lamps give you focused light for reading or other tasks that require concentrated light. To illuminate a room, you need direct and indirect lighting. You can choose ceiling lights such as pendant lamps or flushmount ceiling lights or chandeliers. This give you light from above. The light comes from the ceiling and pours downward. Torchiere floor lamps throw light upwards towards the ceiling. Floor lamps are sometimes arched with swing arms. These are portable and can be moved to where task light is needed. Table lamps pour light downwards towards the table surface. You can even place LED candle lights on tables to serve as accessories.
Can you give me an example of a sentence using the word 'exterminate'?
I want to exterminate the termites in the floor of my house. I will exterminate the people that work on my third floor work area.
Can you give an example of a simple sentence using the word 'shatter'?
The hard impact with the floor caused the vase to shatter.
Can you give me 1 example of static electricity?
One example of static electricity is when you drag your feet across the floor and then shock someone. The shock is the static electricity.
Give an example of when friction is a hindrance?
Friction can be extremely irritating, for example if you are trying to open a rusted door or slide along a carpeted floor without stopping once.
