Floor And Ceiling Revenue

Price ceilings impose a maximum price on certain goods and services.

Floor and ceiling revenue.

Price ceiling as well as price floor are both intended to protect certain groups and these protection is only possible at the price of others. It must be set below the equilibrium price to have any effect. 2008 09 floor and ceiling revenue limits provided should be considered as indicative only. Governments will usually impose price ceilings when they believe that the equilibrium price in the market is too high and undesirable e g.

Floor and ceiling revenue limits are defined in detail in the access undertaking. The limits have been based on artc forecasted expenditures for 2008 09 as submitted to the accc as part of artc s application. Price floor is typically proposed to ensure good income of people involved in farming agriculture and low skilled jobs. They are usually put in place to protect vulnerable buyers or in industries where there are few suppliers.

The domestic demand function is given by q 10 2 x p the domestic supply function is q 2 x p 2. The maximum level permissible in a financial transaction. A budget ceiling sometimes incorrectly referred to as a debt ceiling is a cap on business spending based on one or more formulas or limits set by a business. Start studying unit 4 elasticity price floors and price ceilings.

Ceiling refers to the highest price the maximum interest rate or the largest of some other factor involved in a transaction. The graph below illustrates how price floors work. A suppose there is a price ceiling of 2 sar. Price floor and ceiling tax subsidy consider the market for butter in saudi arabia.

Understanding the different methods businesses use to set budget ceilings will help you maintain flexibility in your spending without going into unmanageable.