Price Ceiling and Price Floor -

Price Ceiling and Price Floor - 

  • Price Ceiling - 
    • Legal max price to help buyers
    • Below equilibrium
    • Ex: Rent control
    • 4 consequences (when set too low) -
      • Lower prices for some consumers
      • Shortages
      • Long lines for some buyers
      • Illegal sales above the equilibrium price
Image result for price ceiling
  • Price Floor - 
    • Legal min price meant to help sellers
    • To keep product price from falling
    • Ex: Minimum wage
    • 4 consequences -
      • Higher product prices
      • Surplus
      • Higher taxes
      • Waste
Image result for price floor

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