27/10/15
Lesson 3-Price Controls
Learning Objective: I can explain, distinguish between, illustrate and give examples of maximum and minimum price controls.
DA: Listen to the radio clip and analyze/illustrate the economic concept in question.
Questions about subsidies...?
Price Controls:
DA: Listen to the radio clip and analyze/illustrate the economic concept in question.
Questions about subsidies...?
Price Controls:
- Maximum (ceiling) price
- Minimum (floor) price
Maximum Price Controls: Governments sets a maximum price below equilibrium price, preventing producers from raising the price. Also known as a "price ceiling".
Maximum Price Controls: Governments sets a maximum price below equilibrium price, preventing producers from raising the price. Also known as a "price ceiling".
- Set to protect consumers.
- Product is a necessity and/or merit (good would be underprovided if the market were allowed to operate freely).
Ex. Governments may set maximum prices in agricultural and food markets during times of food shortages to ensure low cost food for poor or may set max prices on rented accommodations in attempt to ensure affordable housing.
Practice: SL/HL
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HL
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