Post on 04-Jan-2016
Micro Lesson 7
Price Controls
Florida’s Price Gouging Laws
Prior to my death, I would be willing to donate a kidney to a stranger for AT
LEAST• A) free
• B) $1,000
• C) $5,000
• D) $10,000
• E) $50,000
• F) $100,000
• G) $500,000
• H) $1,000,000
• I) I would not donate a kidney for any price.
Distorting Market Outcomes
• Price Ceilings create shortages (rent control in Manhattan)
Distorting Market Outcomes Continued
• Price Floors create surpluses (minimum wage)
The Upside-Down House Rule:
• The floor’s up high, & the ceiling’s down low.
With Your Partners
Complete The Handout
Clicker Quiz
With Your Partners
The minimum wage is a type of
• A price floor
• B comparable worth
• C price ceiling
• D marginal price
People against raising the minimum wage argue that when a legal
minimum wage is established above the equilibrium wage in the labor
marketA there will be an increase inunemploymentB the quantity of labor demanded by firmswill increaseC the quantity of labor supplied willdecreaseD employers will have an incentive to usemore labor and less capital
Suppose the government set a bindingprice ceiling at $2. What would be thequantity demanded and the quantitysupplied?
Organizers of many high-interest sporting events such as the Super Bowl and the World Series usually set ticket prices lower than the equilibrium price, citing
fairness to the public as their reason. What names do economists give to the resulting set
price and disequilibrium situation?
• A price ceiling; surplus
• B price ceiling; shortage
• C price floor; shortage
• D price floor; surplus
Which of the following is considered a negative side-effect
of minimum wage?
• A) full employment
• B) increased interest rates
• C) unemployment
• D) failure to meet equilibrium production
The Economics Dance