Overview
Price ceilings are important economic tools used by governments to control the prices of essential goods and services. By setting a maximum price, they aim to protect consumers from high costs, especially in times of crisis. However, while price ceilings can provide immediate relief, they often lead...
Key Terms
Example: At a price of $10, the quantity of apples supplied equals the quantity demanded.
Example: A shortage of housing occurs when many people want to rent but few apartments are available.
Example: If a consumer is willing to pay $50 for a shirt but buys it for $30, their consumer surplus is $20.
Example: Setting a price ceiling on rent to make housing affordable.
Example: Minimum wage laws set a price floor for labor.
Example: The supply curve slopes upward, indicating that higher prices lead to more supply.