Government Price Floors And Ceilings

In other words a price floor below equilibrium will not be binding and will have no effect.

Government price floors and ceilings.

Price ceiling is a measure of price control imposed by the government on particular commodities in order to prevent consumers from being charged high prices. A price ceiling is a legal maximum price but a price floor is a legal minimum price and consequently it would leave room for the price to rise to its equilibrium level. The great depression of the 1930s led to a major federal role in agriculture. Although both a price ceiling and a price floor can be imposed the government usually only selects either a ceiling or a floor for particular goods or services.

A price ceiling is the legal maximum price for a good or service. Price ceiling can also be understood as a legal maximum price set by the government on particular goods and services to make those commodities attainable to all consumers. The depression affected the entire economy but it hit farmers particularly hard. If you re seeing this message it means we re having trouble loading external resources on our website.

Price floors and price ceilings are government imposed minimums and maximums on the price of certain goods or services.