Illustrate on a Demand and Supply Diagram How the Existence

question 117

Essay

Illustrate on a demand and supply diagram how the existence of a price floor would distort the market outcome, and specify what effect (i.e., shortage or surplus) the price floor may create.

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Definitions:

Maslow's Hierarchy

A psychological theory proposing that human needs are arranged in a hierarchy from physiological needs to safety, love and belonging, esteem, and finally self-actualization; individuals are motivated by the need they have not yet satisfied.

Alderfer's ERG Theory

A model in motivational psychology that categorizes human needs into three groups: Existence, Relatedness, and Growth.

Herzberg's Two-factor

A theory that suggests job satisfaction and dissatisfaction arise from two separate groups of factors: motivators and hygiene factors.

McClelland's Acquired Needs

A theory suggesting that an individual's specific needs (achievement, affiliation, power) are acquired over time and shape their motivation and behavior.