ECON 1116 Chapter Notes - Chapter 6: Price Ceiling, Price Floor, Price Controls
15 Nov 2016
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Economists have 2 roles: scientists who develop and test theories to explain the world around them, and policy advisers who use theories to help change the world for the better. Price controls are enacted when policymakers believe that the market price of a g or s is unfair to buyers or sellers can generate inequities of their own. Buyers of any good want a lower price while sellers want a higher price. Legal max on price at which ice cream can be sold- price ceiling. Price ceiling of (above equi), price ceiling is not binding market forces naturally move the econ to equilibrium and ceiling has no effect on price of q sold. Ceiling at (below equi), price ceiling is binding supp and dem forces ten to move the price toward the equi price, but when the market price hits the ceiling, it cannot, by.
