ECON 2030 Lecture Notes - Lecture 6: Price Ceiling, Economic Equilibrium, Price Floor
Document Summary
For buyer: desirability, transactions, follow directions more = more transactions less = less; price goes up with more desirability, and down will less desirability the more available, price goes down the less available, supply and demand. Price goes down: price controls, price ceiling a maximum allowable price. Market outcome will only be affected by a price ceiling if the price is set below the equilibrium price. Therefore is becomes binding, as price goes down the demand goes up, but quantity goes down: binding (i. e. , effective, non-binding (i. e. , ineffective, examples, price floor a minimum allowable price. If market price is above the minimum it is not binding. But if the price floor is above market price it affects the market. But seller"s benefit goes up so quantity goes up. Quantity restriction higher than the equilibrium price is price it becomes binding. This results less quantity, which leads directly to a price increase: binding (i. e. , effective, non-binding (i. e. , ineffective, examples.
