Economics Ch. 4

Price controls or quantity controls create..

Undesirable side effects such as inefficiency and crime.

Price ceilings are _______ the equilibrium price.

Below

Price ceilings lead to..

1. Inefficient allocation to consumers
2. Wasted resources
3. Low quality
4. Illegal activity

Price floors are _______ the equilibrium price.

Above

Price floors lead to..

1. Inefficient allocation of sales among sellers
2. Wasted resources
3. Inefficiently high quality

Quantity controls, or quotas limit..

the quantity of a good that can be bought or sold.

Excise Tax

Taxes on the purchase or sale of a good

Excise taxes cause inefficiency called..

excess burden or deadweight loss