ECON 2030 Chapter : Econ 2030 September 17
Document Summary
Price ceiling: maximum allowable price for a good or service price. Price floor: minimum allowable price for a good or service. Quantity restriction: limit of the amount of good or service that can be transacted. If there is no affect in the market it is considered non binding. If there is an affect in the market it is considered binding. Binding price ceiling prevents prices from rising too high. Minimum wage laws is a non binding price law. Customers sensitive with price then the price is lowered. Insensitive raise price because they will buy it regardless. Responsiveness of buyers to change in price. Price goes up willing and able to purchase less. The function will always be a negative #. Action, something happens which prompts the reaction. If elasticity demand is greater than 1, price elastic. If elasticity demand is less than 1, price inelastic. If elasticity demand is equal to 1, unit elastic.
