ECO100Y5 Chapter 5: ECO100 - Microeconomics Chapter 5 Textbook Notes
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ECO100Y5 Full Course Notes
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Sometimes equilibrium price isn"t satisfying enough to both buyer and sellers. Government steps in by setting price controls. The maximum price sellers are allowed to charge for a good/service. If set below equilibrium price, a shortage occurs due to increased demand. If set at or above equilibrium price, there will be no concern. *although price ceilings can have negative effects, they still occur because they provide gains to certain people, sellers don"t know what price to sell their goods at otherwise, and government of cials don"t understand supply and demand analysis. Minimum price at which a good or service can be sold at. If set above the equilibrium price, there will be a surplus. If set below the equilibrium price, there is no concern. Sells it at a loss over seas. Pays some producers not to produce at all or limits their ability to produce more output. Wedge between demand price and supply price.
