ECON1010 Lecture Notes - Lecture 4: Economic Surplus, Deadweight Loss, Price Ceiling
Document Summary
Price ceiling: represents a max allowable price imposed by the government, when gov believes that p is unfairly high (to protect low-income consumers, protect people on the poverty line and cannot afford the good (good. = need not a want: e. g medicine, health care services. A (yellow) + b (pink) = consumer surplus. University fees are caped --> a good everyone should afford (excluding their income) In a war = goods necessity (bread, petrol, etc. : black market --> prices can fluctuate so demand = supply (ppl find a second way to find that good, richer ppl still trade. Loss in economics surplus due to the market being prevented from reaching the p* and q* where mc = mc. If set price above equilibrium = shortage of demand and excess of supply. E. g minimum wage = 15; before the wage family were employing cleaners. 1st triangle = families do their own cleaning. 2nd triangle = cleaners cleaning for a lower wage.
