Floor And Ceiling Economics

Price floors and price ceilings are government imposed minimums and maximums on the price of certain goods or services.

Floor and ceiling economics.

Price ceiling is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply. The lower price will result is a shortage of supply and hence decreased sales. This section uses the demand and supply framework to analyze price ceilings. Price ceiling has been found to be of great importance in the house rent market.

It has been found that higher price ceilings are ineffective. A price ceiling can increase the economic surplus of consumers as it decreases economic surpluses for the producer. A price ceiling is essentially a type of price control price ceilings can be advantageous in allowing essentials to be affordable at least temporarily. A price ceiling keeps a price from rising above a certain level the ceiling while a price floor keeps a price from falling below a certain level the floor.