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Price Ceiling and Government Alex Zhou Benz Ceiling.

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1 Price Ceiling and Government Alex Zhou Benz Ceiling

2 Price Ceilings Definition The maximum price a seller is allowed to charge for a product or service. Usually set by government. It is always below the equilibrium point.

3 What des Price Ceiling do Makes the price above it illegal and the price below or equal it legal. To ensure consumers to purchase some essential goods/services. Example: Rent controls, usury laws (maximum interest rate one can charge another one)

4 Possible negative outcomes Rationing problem – Unregulated shortage leads to unfair distribution of goods/services. – Solution: ration coupons. Black markets – Where goods/services are bought and sold at illegal high prices.

5 A price ceiling graph

6 Price Floor A price floor is a minimum price fixed by the government. It is always above the equilibrium point. Example: PF on alcohol to lower alcohol consumption, minimum wage, etc.

7 New York Rent Control New York State legislators defend the War Emergency Tenant Protection Actalso known as rent controlas a way of protecting tenants from war-related housing shortages. The PC was meant to enable people to purchase necessary goods, but it caused a shortage. Almost all the cities succumbed to this blandishment.

8 The Black Sea: center of Nuclear Black Market The Black Sea region is the center of the worlds nuclear black market, with Russia being the known or suspected source of most nuclear contraband and Turkey the preferred destination. There are organized crimes that successfully performed nuclear smuggling. Black market was established because nuclear trading is strictly prohibited/limited around the world.

9 "Price Ceiling." Investopedia. N.p., n.d. Web. 13 Oct "Floor." Investopedia. N.p., n.d. Web. 13 Oct "CFA Level 1." Investopedia. N.p., n.d. Web. 24 Oct "Rent Control." : The Concise Encyclopedia of Economics. N.p., n.d. Web. 24 Oct "The Black Sea: Center of Nuclear Black Market." N.p., n.d. Web..


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