Price Ceiling Price Floor

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“Price ceilings prevent a price from rising above a certain level. When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result. Price floors prevent a price from falling below a certain level. When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply or surpluses will result. Price floors and price ceilings often lead to unintended consequences.” In this 1-2 page paper, analyze what happens when a higher minimum wage is enacted (raising a price floor on the price of labor). Will the number of workers hired change? Why? What might be an unintended consequence of a higher minimum wage law designed …show more content…

It is also a way by which government control price by setting a price at a particular point and stop or preventing the price from rising higher or going upward. Price Ceilings are maximum prices set by the government for particular goods and services that they believe are being sold at too high of a price and thus consumers need some help purchasing them. Price ceilings only become a problem when they are set below the market equilibrium price (www.econport.org, 2006). Price ceilings prevent a price from rising above a certain level. When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result (www.khanacademy.org, …show more content…

What might be an unintended consequence of a rent control wage law designed to help low income renters? Unintended consequence will be people that need apartments are more than apartments that available and leads to shortage, few and scarce of apartments and more number of people that need apartments. Reference www.econport.org (2006). Price-Controls. Retrieved from: http://www.econport.org/content/handbook/Equilibrium/Price-Controls.html www.khanacademy.org (n.d). Price Ceilings and Price Floors. www.khanacademy.org. Retrieved from: https://www.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-surplus/deadweight-loss-tutorial/a/price-ceilings-and-price-floors-cnx B. Taylor, (2006). Price Floors. Economics.fundamentalfinance.com. Retrieved from:

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