(8) Restrictions on Market Prices
Price Ceiling, Price Floor, Price Restrictions, Limits on Price, Surplus, Shortage
This illustrates the effect of a price ceiling and a price floor on the market outcome. It demonstrates how price restrictions can, but need not, limit the market's ability to adjust and move to an equilibrium. Situations where surpluses or shortages emerge are illustrated, as are situations where the price restrictions have no effect on the market.
Crane, Steven E., "(8) Restrictions on Market Prices" (2011). Principles of Microeconomics. Paper 19.
Ability to analyze price restrictions. Ability to identify situations when surpluses or shortages can be expected to emerge. Ability to explain when price restrictions will and will not have an impact on the market outcome.
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