Question:

In this market describe a hypothetical situation where a price ceiling or floor could be imposed.?

by Guest31840  |  earlier

0 LIKES UnLike

what implications would this have for the market?

 Tags:

   Report

2 ANSWERS


  1. price ceiling (below equilibrium price)

    => supply < demand, shortage of good

        rationing and black market

    price floor (above equilibrium price)

    supply > demand, overproduction, attempts to bundle unwanted  goods with those w/o price controls.


  2. If price celling is set below equilibrium then there will shortage emerge which will lead to some negative consequences (i.g. shadow economy, fall in quality of goods, etc.)

    If price celling is set above equilibrium then there will be no effect to such price celling

    If price floor is set below equilibrium then it will have no any effect.

    If price floor is set above equilibrium then it will cause emerge of surplus thus will lead to some negative consequences, (obsolete goods, fall in efficiency, etc.)

Question Stats

Latest activity: earlier.
This question has 2 answers.

BECOME A GUIDE

Share your knowledge and help people by answering questions.