7 Government Actions in Markets

A photo of an election campaign where an elderly woman speaks from a podium, surrounded by placards promising wage reforms.

Can Congress repeal the law of market forces?

Chapter Checklist

When you have completed your study of this chapter, you will be able to

  1. 1 Explain how a price ceiling works, and why a rent ceiling creates a housing shortage and is inefficient and unfair.

  2. 2 Explain how a price floor works, and why the minimum wage creates unemployment and is inefficient and unfair.

  3. 3 Explain how a production quota works, and why it brings a higher price and is inefficient and unfair.

MyEconLab Big Picture Video

Get Foundations of Economics, 8th Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.

Start your free trial