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econ price floor
Terms in this set (12)
You are about to participate in an experiment about how markets work when the government imposes a price floor on goods or services; in this case, the market for cranberries. A price floor is a price control. It places a lower limit on the price of cranberries. As the price of cranberries can't fall below this amount, a price floor typically favors sellers. For example, if the price floor is $10.00, buyers can't legally offer less than this amount, regardless of market conditions such as demand and supply.
if price floor is 13.00
There are 4 rounds of play in the market experiment "Price Floors." In the first 2 rounds, you will sell the cranberries in a free market, with no imposed price control, alongside virtual players. In the last 2 rounds, you will sell cranberries in a market that has a price floor
in this experiment there will be
4 rounds, free market, price floor
In each round of the market experiment "Price Floors" you will be a seller. In the first two rounds you will be a seller in a free market. As a seller, you will make an "ask," where you offer a price at which you agree to sell the product. As a seller, before each round begins, you will be told your cost of producing a single unit of the good. You will not be able to ask a price that is lower than your cost. For example, if your cost is $10.00, you cannot ask $9.99. Your goal is to ask for and sell the good for the highest possible price, in order to maximize your gain (the difference between an accepted ask and your cost).
In the third and fourth rounds, you will also post asks based on your cost and you will have the added restriction of a price floor. You won't be able to ask for an amount lower than either your cost or the price floor.
Your cost changes each round
as a seller you will make
an ask, sell
as a seller your cost is
as a seller in the free market rounds
as a seller in the price floor
as a seller, if your cost is 8.50 and you sell for 11.25 what is your gain
You are a seller in a market with a price control. Your costs of production are $2.25 per unit, and a price floor is put on the market at $1.50. The lowest acceptable ask price for you would be
You are a seller in a market with a price control. Your costs of production are $2.00 per unit, and a price floor is put on the market at $1.50. The lowest acceptable ask price for you would be
In rounds 3 and 4 of the price floors experiment, part of the transactions screen will be grayed out with a message that says "It is illegal to trade in this area." The grayed out area represents prices
In the price floors experiment, the first 2 rounds are free market rounds and rounds 3 and 4 impose a price floor. In your role as a seller, which of the following is true?
During the free market rounds, you only need to consider your costs to determine your ask price; during the price floor rounds, you must consider costs and the price floor.
A price floor is
favor sellers but hurts them by causing surpluses.
Which of the following is an example of a price floor?
A law that says employers cannot pay less than $8 per hour
A price floor
results in the quantity supplied being greater than the quantity demanded.
Which of the following accurately describes what would happen after the removal of a price floor?
The price would fall, quantity supplied would fall, and quantity demanded would rise.
Which of the following is likely to happen after a price floor is removed?
Sellers have sales offering prices lower than those under the price control.
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 1- Macro (Test 1)
Economics Test Chapters 22,23,24
3 - Demand and Supply
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