ECO100Y1 Lecture Notes - Lecture 7: Price Ceiling, Market Clearing, Price Floor
Document Summary
Government sometimes imposes price ceilings (eg. rent controls) or price. When government interfere with the functioning of market, there are often unintended consequences. Dd and ss should be drawn and the impact assessed. Rent ceiling if rent (price) ceiling is beneath the market clearing price, there is a shortage. Note: if rent (price) ceiling is above the market clearing price, it has no e ect on the market. Economic impact of rent controls: creat shortage (demand exceeds supply) But do rent controls help the disadvantage housing: to some extent, but at the above cost. Note: if minimum wage rate (price) is beneath the market clearing price, it has no e ect on the market. Disadvantage: reduces number of jobs for unskilled workers. reduces opportunity for on-the-job training. primarily a ects teenagers, who are just entering the job market. Suppose you are an employer and the minimum wage increases from.
