The result of a binding price floor is.
Price floor quizlet.
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It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price.
They don t face incentives to cut costs by using more efficient production methods because the high price offers them protection from lower cost competitors.
A government law that makes it illegal to charger lower than the specified price.
A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital.
In this case there is no effect on anything and the equilibrium price and quantity stay the same.
Two things can happen when a price floor is implemented.
The federal minimum wage at the.
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Binding price floors encourage the formation of a black market.
Price floors and price ceilings.
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Which of the following is an accurate statement about the consequence of a binding price floor.
But this is a control or limit on how low a price can be charged for any commodity.
The price ceiling is below the equilibrium price.
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Quantity supplied at the price floor exceeds the amount at the equilibrium price and quantity demanded is less than the amount at the equilibrium price.
Quantity demanded at the price ceiling exceeds the amount at the equilibrium price and quantity supplied is less than the amount at the equilibrium price.
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Final exam ch.
Consequences of price floors.
Perhaps the best known example of a price floor is the minimum wage which is based on the normative view that someone working full time ought to be able to afford a basic standard of living.
