Introduction to Microeconomics

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5. Minimum Price Controls

  • Introduction to Micro
February 11, 2010

Tags Austrian Economics OverviewInterventionismPrices

Thou shalt not sell a certain product or service below a certain price, e.g. wheat, cotton, corn, cheese, sugar. This will result in an artificial unsold permanent surplus, as it does in the American farm situation. Initially resources are attracted into the field, but the artificially high price discourages buyer demand. This kind of interventionary tampering with market signals destroys the market tendency to adjustment and brings about losses and misallocation of resources in satisfying consumer wants.The principles of minimum price controls apply to minimum wage laws, which lead to involuntary mass unemployment.

Part 5 of 14. Presented in 1986 at New York Polytechnic University.

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