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3 Cards in this Set
- Front
- Back
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Price ceilings: Shortages |
Controlled price (price ceiling) is below equilibrium price~ greater demand that quantity supplied |
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Price ceilings: Reductions in quality |
It’s much easier to evade the law by cutting quality than by raising price, so when prices are held below market levels, quality declines
Ex: gas stations in 1973 (nixon price controls)~ gas stations would close at owners convenience |
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Deadweight loss |
lost consumer and producer surplus (lost gains from trade) |
