ECON 202 Lecture 7: Government Intervention in the Market
8 Feb 2017
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Document Summary
One option a gov has for affecting a market is the imposition of a price ceiling or a price floor. Price ceiling: legally determined max price that sellers can change: market price cannot be higher than a certain ceiling. Price floor legally determined min price that sellers may receive. Price cannot be lower than a certain floor. If you"re i(cid:374) a (cid:272)o(cid:373)petitive e(cid:374)viro(cid:374)(cid:373)e(cid:374)t, the(cid:374) you have a lot of produ(cid:272)ers. Pri(cid:272)e floors te(cid:374)d to (cid:271)e(cid:374)efit supplier"s (cid:271)/(cid:272) of la(cid:271)or. Supporters of the min wage see it as a way of raising the incomes of low-skilled workers. Opponents argue that yes it will help employees. It will hurt those who would like to work and are currently out of work. Results in fewer jobs and imposes large costs on small businesses. Assuming the min wage does decrease employment, it must result in a deadweight loss for society.
