Government-set Price Floor

  

Categories: Econ, Regulations, Tax

See: Price Floor. See: Price Controls. See: Government-Set Price Ceiling.

Related or Semi-related Video

Cost Accounting: What is Price Fixing?0 Views

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And finance Allah Shmoop what is price fixing up Okay

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So why are we fixing prices anyway Like when did

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they break Okay Yeah Old joke among collude er's And

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that's pretty much what price fixing is It's collusion Like

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in a given market There are three cellars of zombie

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hosiery Extra thick stockings Teo you know keeping all the

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goop and bones stuff What one specializes in the fall

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line another the spring and another the summer But instead

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of competing against each other such that a setup like

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this lovely ensemble might fetch one hundred dollars at Zombie

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Mart while they collude on pricing and all agreed and

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never sell ho shary for less than two hundred dollars

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per And zombies well have to buy it or you

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know bad things happen All right Well the biggest price

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fixer in the world OPEC These guys the Organization of

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the Petroleum Exporting Countries the people who control oil price

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fixing of oil in their countries is in fact legal

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But not in the U S So how do we

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police it or manage it Are what do we do

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Just embrace Tesla's Yeah Hard to do on a global

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scale Well airlines have price fixed in the past So

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have computer chip manufacturing companies and well so have self

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cleaning litter box companies And if you think about the

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motivation to fix prices well it's big Three owners get

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together in a bar and quietly opine on their low

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profit margins You know the ones they're getting in their

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existing business competing against each other The three of them

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represent ninety two percent of all the sales in their

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industry segment holiday You know solar powered roof tiles segment

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at a dollar a tile They make a dime in

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operating profit But if they all colluded and sold them

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for a dollar forty instead of a dollar bill nobody

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would really know the difference the costs or just passed

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on to the idiot consumer who simply wants his refrigerator

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to be powered by the great and powerful Sun God

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But at a buck forty way higher than where supply

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meets demand On this graph here Instead of operating profits

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of a dime a tile they make like fifty cents

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five times the profit number Is all that additional profit

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worth the legal risk of colluding illegally in countries who

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don't allow you to collude Is it worth the jail

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time Well for some it is especially you know those 00:02:21.03 --> [endTime] who look good in orange

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