Showing posts with label price controls. Show all posts
Showing posts with label price controls. Show all posts

Monday, July 27, 2009

Price Floor


A price floor sets a minimum price that can be legally charged in a market. It is binding if the price floor is above the equilibrium price in the market. Minimum wage laws are an example of a price floor.

See "Price as a Rationer."

Sunday, May 25, 2008

Price Ceilings


A price ceiling sets a maximum price that can be legally charged in a market. It is binding if the price ceiling is below the equilibrium price in the market. Rent controls are an example of a price ceiling.

See "Price as a Rationer."

Thursday, May 22, 2008

Price Controls

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Economists use supply and demand analysis to examine most issues that affect the economy. For example, the supply & demand framework is used to examine minimum wage laws and rent controls.

Price controls are legal restrictions on the prices charged in the market for a product or resource.

A price floor is the minimum price that can be legally charged in a market. The minimum wage is an example of a price floor.

A price ceiling is the maximum price that can be legally charged in a market. Rent controls for apartments are an example of a price ceiling.