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Price Ceiling

Price Ceiling. Price. S. Market-clearing price. Legal price ceiling set below market price. D. Qs. Qd. Quantity. Price Floor. Price. S. Legal price floor set above market price. Market-clearing price. D. Qd. Qs. Quantity. Class Activity. Minimum wage

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Price Ceiling

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  1. Price Ceiling Price S Market-clearing price Legal price ceiling set below market price D Qs Qd Quantity

  2. Price Floor Price S Legal price floor set above market price Market-clearing price D Qd Qs Quantity

  3. Class Activity • Minimum wage • Agriculture price minimums • Rent control • “Usury” laws on credit card loans, setting maximum interest rates • Price controls on gasoline in the 1970s Instructions: • Decide whether each is a price floor or price ceiling. • Decide whether consumers or producers would favor the control. • Produce a market graph illustrating the result of this price control.

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