Price Controls
The government sets a minimum or maximum price on a product.
What is a price control?
Represents social surplus that is lost to society because resources are not allocated efficiently.
What is welfare loss?
A tax that is paid straight from the buyer
What is direct tax?
The financial assistance given to consumers or producers to incentivize consumption or production of a good or service
What is a subsidy?
Laws that determine the minimum price of labor.
What is minimum wage?
The government sets a maximum price on a product that is set below the equilibrium price.
What is a price floor?
Creates welfare loss.
What is disequilibrium?
A tax that is paid partly by consumers, but is paid to the government by firms.
What is indirect tax?
Subsidies granted on exports is negative for these kind of producers?
What is foreign producers?
People that have interest in the success of a business.
What is a stakeholder?
The government sets a minimum price on a product that is set above the equillibrium price.
What is a price ceiling?
The money taken from the producer and consumer surplus.
What is government revenue?
Indirect taxes put on specific goods such as gasoline, cigarettes, and alcohol
What is excise tax?
Government wanting to increase consumption of a good or service.
What is desire to influence levels of consumption?
Expensive goods that are inaccessible to most consumers in a society that are often the focus of excise taxes.
What are luxury goods?
Minimum wage set to $12.95 is an example of...
What is a price ceiling?
Too many resources are allocated to production of good.
What is overallocation?
A tax that is a fixed amount per good purchased
What is specific tax
Influence the levels of production
What is a purpose of subsidies?
When a price is set at a particular level.
What is fixed prices?
This type of price control causes a shortage
What is price ceiling
High than equilibrium product prices.
What is firm inefficiency?
To discourage people from consuming harmful goods.
What is a reason for government to impose an indirect tax?
Consequence of subsidies for producers.
What is overallocation?
A tax that increases as the price of the good increases
What is ad valorem tax