Please enable JavaScript.

Coggle requires JavaScript to display documents.

Price Controls (Price ceiling (Shortage (Problem of allocation (Coupon…

- - - - Coupon rationing: people do not get the amt they need, high administrative costs
      - First come first serve: inefficient
      - Personal bias: doesn't go to people who need it the most
    - - Good goes to bidder of highest price, defeats objectives
- - - - Increase of indirect taxes/reallocation of expenditure
      - Transportation and storage costs
      - If released in the global market, there will be lower world prices, which signals to producers in foreign countries w/o price supports to cut back production > underallocation
    - - Increase in SS: higher wages make work more attractive
      - Illegal employment below min. wage
      - Misallocation: industries may hire less skilled workers due to increase in COP, and output may decrease