Economics 1021A/B Lecture Notes - Lecture 6: Equilibrium Point, Economic Equilibrium, Price Ceiling
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ECON 1021A/B Full Course Notes
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The idea that when rent is too high, the government may step in to limit the price of rent: this is not necessarily a good thing. Price ceiling or price cap is when the government sets a certain price that rent cannot exceed without making it illegal. Setting the price cap above the equilibrium price has no effect because they are already willing to pay less than the government issues. But setting the price cap below the equilibrium price does because it would mean that normally people are willing to pay more for a certain quantity but the government does not allow that. A ho us i ng sho rtag e. Due to the effects of a price ceiling being set below the equilibrium point. At the price set by the government, the quantity demanded exceeds the quantity supplied: causes a shortage. Rent above the rent ceiling of is illegal.