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Price ceiling

Krugman AP Macro Economics Chapter 8

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?? Chapter 8: Supply and Demand: Price Controls (Ceilings and Floors) Price controls: legal restrictions on how high or low a market price may go, government action in economy price ceiling: a maximum price sellers are allowed to charge for a good or service price floor: a minimum price buyers are required to pay for a good or service. Assumption: the markets in question are efficient before price controls are imposed price controls in inefficient markets don?t necessarily cause problems and can potentially move the market closer to efficiency Price Ceilings ? Push Prices down Price Ceiling: suppliers have less incentive to offer apartments less of a good are produced Consumer have higher demand shortage of good

AP Economics Chapter 7 Notes

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Chapter 7 Notes Sect 1 Idea of demand centers on people being both willing and able to pay for a product or service In a market economy, consumers collectively have a great deal of influence on the prices of all goods and services. Demand: The amount of a good or service that consumers are able and willing to buy at various possible prices during a specified time period. Supply: The amount of a good or service that producers are able and willing to sell at various prices during a specified time period Market: The process of freely exchanging goods and services between buyers and sellers. A market for a particular item or service can be local, national, international, or a combination of these
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