Price Floor and Price Ceiling

1. Textbook

 Chapter 6 

2. Read Lecture Slides

3. Extra Redings

1. Course Video – Minimum Wage (you can find this in the video section) . This is a combination of news items.


Good Intentions – Minimum Wage in the US

–       In 1961 Congress began to enact laws that increased the minimum wag

–       In the 1950s the minimum wage was $1.00/hr effective minimum wage $4/hr 1984

o   Effective minimum wage -> Minimum Wage + Pay Roll Taxes + Social Security -> $4.00 in 1982.

–       Adverse effects of the Minimum Wage

o   If employers didn’t have to pay minimum wage they could hire more young, unskilled workers

o   There is a correlation between the Minimum Wage going up and unemployment amongst young African Americans

– min wage/unemployment rate of young African Americans

  • 1984 – $1.00/13%
  • 1964 – $1.15/25%
  • 1974 – $2.00/39%
  • 1984 – $3.35/50%
  • Can causation be inferred from this correlation?
    • Video claims causation
  • Video suggests that high black crime rates are due to young African Americans not being able to attain jobs due to the minimum wage.
    • Can a causal link be inferred here?

2. Video on Rent Ceiling (you can also find this in the video section)


The Video Tutorial: Welfare Analysis -A Price Ceiling.


1. Price Ceiling: Rent Ceiling

2. Price Floor: Minimum Wage