Economics: Private and Public Choice, 14th ed. By James Gwartney
Chapter 4 Resources
Topic - Price Controls
Related Videos
1. The Unintended Consequences of Price Controls: Prof. Antony Davies explains that prices
are not levers that set value, but rather, are metrics that respond to value. Therefore, since
government cannot legislate value, attempts to control prices will generate unintended
consequences.
a. Prices are not ______ that ______ value, but rather, are ______ that ______ to value.
b. Price and value are related in that:
i. Price legislates value
ii. Price signals value
iii. Government legislates price and therefore value
iv. Value and price are unrelated
c. A cap on interest rates will:
i. Exclude low-risk borrowers
ii. Eliminate risk
iii. Exclude all borrowers
iv. Exclude high-risk borrowers
d. A cap on tuition will:
i. Exclude less talented students
ii. Exclude more talented students
iii. Decrease the value of college
iv. Increase the value of college
e. The minimum wage rate is
i. Directly related to the unemployment rate among college graduates
ii. Inversely related to the unemployment rate among high school graduates
iii. Inversely related to the unemployment rate among students without a high
school degree
iv. Directly related to the unemployment rate among high school graduates
f. Discussion Q #1: After natural disasters, supply of essential resources often
decreases while demand for these resources skyrockets. As a result, the price of
those resources increases precipitously. For example, after the disaster in Haiti,
potable water was in short supply and demand for water increased, resulting in very
high prices for water. Some people cried out for the Haitian government to cap the
price of water. Was this a good idea? Why or why not?
g. Discussion Q #2: How do price floors and price ceilings distort market signals? How
does this affect supply and demand?
h. Discussion Q #3: What is the relationship between value and price? Does fixing the
price of a commodity affect its value?
i.
If I had a supercomputer that was able to know all the information related to
product X at time Y, wouldn’t it make sense for me to set the price of X in accordance
with my knowledge of the market for X? Why or why not?
2. Unintended Consequences: Prof. Don Boudreaux explains what economists mean when they
talk about unintended consequences.
a. True or false: Unintended consequences of human action are usually bad
b. True or false: Unintended consequences of human action usually occur when the
motivation for action is bad
c. Which of the following is NOT an unintended consequence of rent control
i. Housing becomes more scarce
ii. Landlords choose to leave the rental industry
iii. The cost of rental housing goes down
iv. Supply of rental units decreases
d. Discussion #1: Does the Endangered Species Act succeed in saving endangered
species? Why or why not?
e. Discussion #2: Are intentions always unimportant? Do we only care about effects
and results?
f. Discussion #3: Would you say that putting price ceilings on low-income housing is a
good moral action? Is it a good economic action? Why or why not?
3. Stossel in the Classroom: Price Gouging: John Stossel delivers a lesson on the economics of
price gouging.
4. Steve Horwitz Explains the Problem with Price Controls on Freedom Watch: On Freedom
Watch with Judge Napolitano, Steve Horwitz explains how price controls on prescription
drugs lead to fewer people having access to medicine.
5. Milton Friedman on Price Controls and Barter: Milton Friedman explains how price controls
can lead to the unintended consequence of people using other forms of money.
6. Welfare State's Effect on Private Charitable Activity [Video]: Milton Friedman sheds light on
the unintended consequences of governmental welfare programs.
Related Articles:
1. Unintended Consequences: Rob Norton provides a basic overview of the unintended
consequences that arise from all human action.
2.
Unintended Consequences: Steven Horwitz examines the concept of unintended
consequences by looking at different institutions and their respective effects on uncertainty.
3.
What is Seen and What is Not Seen: Frederic Bastiat’s seminal essay on the unintended
consequences of government policy.
4.
Price Controls: An encyclopedia entry on Price Controls from the Concise Encyclopedia of
Economics
Rent Control: An encyclopedia entry on Rent Control from the Concise Encyclpoedia of
Economics
6. They Clapped: Can Price-Gougin Laws Prohibit Scarcity?: Mike Munger recounts the effects
that an anti-gouging law had on supplies following a category 3 hurricane.
5.
7.
Gouge Away: Hurricanes and the Politics of Prices: Reason magazine’s John Hood discusses
the political and economic motivations behind price controls.
8.
North Carolina’s Price Control Laws: Roy Cordato of the John Locke Foundation discusses
the unintended consequences of North Carolina’s Price Control laws. Do they help or do
they harm?
9.
Three Fallacies of Rent Control: Robert Batemarco addresses and rebuffs three common
arguments in favor of rent control.
10. The Psychological Consequences of Rent Control : This article discusses how rent control
has unintended consequences on the psychologies of those affected by rent policy.
11. The Perils of Price Controls: Lawyer Richard Epstein argues that price controls can actually
take lives.
Opposing Views
1. Rent Control Around the World: Pros and Cons
2. Exodus of S.F.’s Middle Class
3. Post-Sandy Price Gouging: Economically Sound, Ethically Dubious
Podcasts
1. Munger on Price Gouging: Mike Munger of Duke University recounts the harrowing (and
fascinating) experience of being in the path of a hurricane and the economic forces that
were set in motion as a result. One of the most important is the import of urgent supplies
when thousands of people are without electricity. Should prices be allowed to rise freely or
should the government restrict prices?
2. Boettke on Katrica and the Economics of Disaster: Peter Boettke of George Mason
University talks about the role of government and voluntary efforts in relieving suffering
during and after a crisis such as Katrina.
Games
1. The Market for Thingamajigs: Price Gouging?
2. Frozen Price Game
Comics
Topic - Minimum Wage
Related Videos
1. Does Minimum Wage Hurt Workers?: Some politicians argue that raising the minimum
wage helps the poor and disadvantaged. While this may appear to be the case on the
surface, economics professor Antony Davies explains that minimum wage may be a wellintentioned public policy, but it often hurts the workers most in need of help.
 Quiz Q #1: The Minimum Wage helps ________ at the expense of ________.
 Quiz Q #2: True or false: Increases in the minimum wage have a positive
effect on college graduates, but no effect on high school graduates
 Quiz Q #3: Of Al, Bob, and Carl, who benefited the most from the increase in
the minimum wage? The least?
 Quiz Q #4: Why did the minimum wage have no effect on Carl, the most
productive worker?
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2.
3.
4.
5.
6.
7.
Quiz Q #4: A minimum wage is an example of
 A price ceiling
 A price floor
 An equilibrium price
 Monopoly pricing
Discussion question #1: Proponents of minimum wage laws state that
minimum wages should align with what is known as a “living wage” or a
wage on which one can reasonably get by in society. Do you agree with this
statement? Why or why not?
Discussion question #2: How do minimum wages create incentives? Who
responds to these incentives?
Discussion question #3: What is the relationship between minimum wage
laws and marginal analysis? Unintended consequences?
Discussion Q #4: Are minimum wage laws moral or immoral?
Discussion Q #5: Pretend that you are a store owner who employs cheap
labor. You find out that the President is planning to unveil a new minimum
wage law that would increase the wage from $8.00/hour to $9.50/hour.
How would you change your behavior as an employer in response to this
announcement? Construct a scenario in which you would or would not
change your behavior.
The Job-Killing Impact of Minimum Wage Laws
Nancy Pelosi’s Double Standard on the Minimum Wage
Stossel in the Classroom: Minimum Wage
Unintended Consequences of Minimum Wage
The Truth about the Minimum Wage
Milton Friedman on Minimum Wage
Opposing Views
1. Will a Higher Minimum Wage Cost Jobs?
2. What is a Living Wage?
3. What is a Living Wage?
Related Articles
1. ‘Living Wage’ Kills Jobs
2. A Minimum Wage Equals Minimum Jobs
3. A Minimum Wage Hike is the Wrong Direction for America
4. Do We Really Need a Minimum Wage?
5. Liberal Myths of Minimum Wage
6. The Illusion of Living Wage Laws
7. The Minimum Wage: Good Intentions, Bad Results
8. The Right Minimum Wage: $0.00
9. Minimum Wages
10. How to Reduce Unemployment, If We Want
11. “Living Wage” Law is Public Policy at Its Worst
Advanced Articles on the Minimum Wage
1. Policy Debate: Does an increase in the minimum wage result in a higher unemployment
rate?
Opposing Articles
1. Hong Kong Minimum Wage? Economist Joseph Stiglitz Approves
2. Living Wage: What It Is and Why We Need It
3. Minimum Wage: By the Numbers
4. Minimum Wage Hike Could Boost the Economy, According to New Research
Audio
1. An Economist’s View on the Minimum Wage
2. Coercion, State, and the Minimum Wage
3. Increasing the Minimum Wage: Implications and Effects
Games
1. The Wage is Right!
2. Minimum Wage
a. Class is divided into employers and workers. Each employer can hire up to two
workers. An employer’s revenue from hiring one worker is $20 and from two
workers it is $30. Workers are divided into low opportunity cost of working ($5)
and high opportunity cost ($12). The experiment is divided into three sessions.
Session 1 is a baseline experiment with no minimum wage law. Session 2 introduces
a minimum wage of $15 per worker. Session 3 maintains the minimum wage but
introduces an increase in labor demand by allowing employers to hire up to four
workers.
Comics