MINIMUM WAGE

There are price controls that are seen everywhere in the market. They are actually made in order to benefit the consumers rather than the producers. But those who are the people who are actually using it do not appreciate the incentives that they are getting out of it.

 

Example:

Let us take the example of rent control. This is one of the most famous types of price ceiling methods. If there are inelastic curves for both the demand curve and also in the case of the supply curves for the short term, then even a sizable drop in the rents would lead to a shortage that is very less. The benefits that the consumers get out of this, which is the reduced rent, would be a more valuable thing to the consumers than the shortages of houses for rent, which is very minimal. In

The benefits that the consumers get out of this, which is the reduced rent, would be a more valuable thing to the consumers than the shortages of houses for rent, which is very minimal. In the case of the supply curve for short run, in this case, would have to be inelastic. This is due to the reason that the apartments are buildings that would take a longer time to be made and also to be worn out.

In the long run, the thing that matters would be the incentives that the consumers get out of all this. This type of rent control would discourage new buildings but would encourage the retirement process for the older ones. 

To combat all this, in the long run, there would be changes to be seen. The sellers will try to approach the supply curve for the long run which would be a flatter one than the short-run curve for supply. There would be rationing was done, which would serve the first ones to come for it. This will be the point where there would be bribery that would happen.

There would be rationing was done, which would serve the first ones to come for it. This will be the point where there would be bribery that would happen.

 

The price flooring:

There is the most prominent of the price floorings seen in the United States. This is done for the minimum wages that are to be given to anybody who is working. It was a law that was passed by the United States Congress in the year 1938. There was a certain level that was given then and it has been raised from time to time. 

The main concept behind the minimum wages is to help out the poor people who are really in need. It would not affect the other workers in any way, as they already have salaries that are higher than the minimum wages.

 

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