Floor And Ceiling Revenue

Start studying unit 4 elasticity price floors and price ceilings.

Floor and ceiling revenue.

Governments will usually impose price ceilings when they believe that the equilibrium price in the market is too high and undesirable e g. Price floor and ceiling tax subsidy consider the market for butter in saudi arabia. Ceiling refers to the highest price the maximum interest rate or the largest of some other factor involved in a transaction. Floor and ceiling revenue limits are defined in detail in the access undertaking.

A budget ceiling sometimes incorrectly referred to as a debt ceiling is a cap on business spending based on one or more formulas or limits set by a business. They are usually put in place to protect vulnerable buyers or in industries where there are few suppliers. 2008 09 floor and ceiling revenue limits provided should be considered as indicative only. The domestic demand function is given by q 10 2 x p the domestic supply function is q 2 x p 2.

A suppose there is a price ceiling of 2 sar. A good example of this is the oil industry where buyers can be victimized by price manipulation. The limits have been based on artc forecasted expenditures for 2008 09 as submitted to the accc as part of artc s application. Price floor is typically proposed to ensure good income of people involved in farming agriculture and low skilled jobs.

Price ceiling as well as price floor are both intended to protect certain groups and these protection is only possible at the price of others. Understanding the different methods businesses use to set budget ceilings will help you maintain flexibility in your spending without going into unmanageable. Price ceiling maximum price the highest possible price that producers are allowed to charge consumers for the good service produced provided set by the government. Learn vocabulary terms and more with flashcards games and other study tools.

The graph below illustrates how price floors work.