Floor And Ceiling Economics

A price ceiling keeps a price from rising above a certain level the ceiling while a price floor keeps a price from falling below a certain level the floor.

Floor and ceiling economics.

Price ceiling is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply. The lower price will result is a shortage of supply and hence decreased sales. A price ceiling is essentially a type of price control price ceilings can be advantageous in allowing essentials to be affordable at least temporarily. However economists question how beneficial.

The next section discusses price floors. This is usually done to protect buyers and suppliers or manage scarce resources during difficult economic times. Price floors and price ceilings are government imposed minimums and maximums on the price of certain goods or services. It has been found that higher price ceilings are ineffective.