Price Ceilings & Floors

p Price Ceilings Floors

Price Ceilings

Price ceilings are usually government policies and limits that intend to save consumers from being charged too high a price . This generally means to limit and control how high a price for a product can go . If price ceilings are not present , the suppliers will set prices extremely high for necessities which then become too expensive to be affordable Suppliers know that no matter what , the items that are necessary will be bought by customers no matter what this gives them a chance to charge

high prices and get revenue , but price ceilings by governments are what protect the customers in such situations . However , they should not go unchecked , as changes and shifts are very important based on then currently market realities . An effective price ceiling is usually below the equilibrium point otherwise it is pointless as customers would pay the price at equilibrium which is higher than the price ceiling

Price Floors

Price floors are the opposite of price ceilings - this is the control that is brought about by either government , or cartels and groups that are formed to sell the product as a coalition with quotas . This checks how low a price can go prices when reduce , should not reduce below this line for a certain product . In for price floors to play the role that they are intended to play that is , the price should not be extremely low or else the demand increases but nobody is interested in the production...