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A government-set minimum wage is a price floor on the price of labour. A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, [1] good, commodity, or service. It is one type of price support; other types include supply regulation and guarantee government purchase price.
The graph depicts an increase (that is, right-shift) in demand from D 1 to D 2 along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S). A common and specific example is the supply-and-demand graph shown at right.
Similarly, an interest rate floor is a derivative contract in which the buyer receives payments at the end of each period in which the interest rate is below the agreed strike price. Caps and floors can be used to hedge against interest rate fluctuations. For example, a borrower who is paying the LIBOR rate on a loan can protect himself against ...
A government-set minimum wage is a price floor on the price of labour. A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, [21] good, commodity, or service. A price floor must be higher than the equilibrium price in order to be effective. The equilibrium price, commonly called ...
Not all interest rates work the same. Your choice among these two main types come down to how you save and how you borrow. Here's what to know about fixed and variable rates.
An increased deficit by the national government shifts the IS curve to the right. This raises the equilibrium interest rate (from i 1 to i 2) and national income (from Y 1 to Y 2), as shown in the graph above. The equilibrium level of national income in the IS–LM diagram is referred to as aggregate demand.
Differences between fixed-rate vs. adjustable-rate mortgages. ... 30-year fixed-rate mortgage. Home price. $390,000. $390,000. Loan amount. $370,500 (5% down) $378,300 (3% down) Initial interest rate.
Firms have partial control over the price as they are not price takers (due to differentiated products) or Price Makers (as there are many buyers and sellers). [5] Oligopoly refers to a market structure where only a small number of firms operate together control the majority of the market share. Firms are neither price takers or makers.