Price ceiling: a legal maximum on the price of a good or service example: rent control. Price floor: a legal minimum on the price of a good or service example: minimum wage. The govt can make buyers or sellers pay a specific amount on each unit bought/sold. In the long run, supply and demand is more price-elastic. with a shortage, sellers must ration the goods among buyers. some rationing mechanisms: (1) long lines (2) discrimination according to sellers biases. these mechanisms are often unfair, and inefficient: the goods do not necessarily go to the buyers who value them most highly. In contrast, when prices are not controlled, the rationing mechanism is efficient (the goods go to the buyers that value them most highly) and impersonal (and thus fair). recall one of the ten principles from chapter 1: Markets are usually a good way to organize economic activity.