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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Lovers of classical music persuade Congress to impose a price ceiling of $40 per concert ticket. As a result of this policy, do more or fewer people attend classical music concerts? Explain.

To determine
The impact of price ceiling on music concert ticket.

Explanation

The price controls are government-controlled price mechanisms. The maximum and the minimum prices will be set under the price controls by the government to prevent the overpricing and under pricing in the market and protect the consumer as well as producer interests. The price control mechanisms are known as the price ceilings and price floor.

The price floor is the minimum price that can be charged for a product in the market. This is to prevent the prices from going too low incurring a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The labors should be paid minimum wages when their service is rendered. Similarly, the price ceiling is the maximum limit price that can be charged for a good or service in the market. This is to prevent the prices from going very higher and prevent the exploitation of the consumers...

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