Does Price Ceiling and Price
Floor affect the Social Goals?
Adalberto Briones
Francisco Salazar
YES!!!
Price Ceiling and Price Floor affect the Social
Goals. If you put them too high or too low it
could affect the how much supplies there is
compared to the demand.
Price Ceiling
• Definition-A maximum legal price that can be
charged for a product
• Governments intend price ceilings to protect
from consumers from conditions that could
make necessary commodities unattainable
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Definition-The lowest legal wage that can be paid to most workers.
The minimum wage for certain areas is $5.15/Hour
Minimum wages varies within different jurisdictions.
With this minimum wage there is 14 million people who offer their
services.
• If the minimum wage would change to $4.00 then people that offer their
services would change to 12 million.
• The higher the minimum wage the higher amount of people want to work
Minimum Wage
Price Floor
• Definition-Lowest legal price that can be paid
for a good or service
• For a Price Floor to be effective, it must be
higher than the equilibrium price
Nonrecourse Loan
• Definition-A loan that carries neither a penalty nor further
obligation to repay if not paid back
• Nonrecourse loans are usually used to finance commercial
real estate and similar projects with high capital expenditures,
long loan periods, and uncertain revenue streams.
• It is also commonly used for stock loans and other securitiescollateralized lending structures
Target Price
• A price floor for farm products
• The price at which a stockholder is willing to sell his/her stock.
• The price at which a seller projects that a buyer will buy a
product. This article will attempt to expand this definition.
• Target price is more of a point of view, it depends on how
much you want to sell your stock or buy a product for.
Deficiency Payment
• Definition-A government payment to
compensate farmers for all or part of the
difference between producer prices actually
paid for a specific commodity and higher
guaranteed target prices.
• The total payment is equal to the payment
rate, multiplied by a farm’s eligible payment
acreage and the program payment yield
established for the particular farm.
WORKCITED
• ECONOMICS BOOK
• WIKIPEDIA
• http://www.teachmefinance.com/Financial_T
erms/deficiency_payment.html