Ch7___Price_Ceilings_and_Floors__Handouts_

Ch7___Price_Ceilings_and_Floors__Handouts_ - Price Ceilings...

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Price Ceilings & Floors CHAPTER 7
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C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Explain how a price ceiling works and discuss its implications for the market. xplain how a price floor works and discuss its 2 Explain how a price floor works and discuss its implications for the market.
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7.1 PRICE CEILINGS A price ceiling or price cap is a government regulation that places an upper limit on the price at which a particular good, service, or factor of production may be traded. An example is a price ceiling on housing rents .
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7.1 PRICE CEILINGS ± A Rent Ceiling
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7.1 PRICE CEILINGS igure 7 2 shows how a rent A rent ceiling is imposed at Figure 7.2 shows how a rent ceiling creates a shortage. gp $400 a month, which is below the market equilibrium rent. 1. The quantity of housing supplied decreases to 3,000 units. , 2. The quantity of housing demanded increases to 000 units 6,000 units.
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7.1 PRICE CEILINGS ± What is the impact on Consumer and Producer Surplus?
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7.1 PRICE CEILINGS When a rent ceiling creates a housing shortage, two developments occur: black market A black market Increased search activity Let’s illustrate the black market activity.
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7.1 PRICE CEILINGS Figure 7.3 shows how a rent
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This note was uploaded on 03/24/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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Ch7___Price_Ceilings_and_Floors__Handouts_ - Price Ceilings...

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