Marketclearing price Legal price ceiling set below market price Price Quantity D S Qs Qd Price Floor Marketclearing price Legal price floor set above market price Price Quantity Qd Qs ID: 466139
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Slide1
Price Ceiling
Market-clearing price
Legal price ceiling set below market price
Price
Quantity
D
S
Qs
QdSlide2
Price Floor
Market-clearing price
Legal price floor set above market price
Price
Quantity
Qd
Qs
D
SSlide3
Class Activity
Minimum wageAgriculture price minimumsRent control“Usury” laws on credit card loans, setting maximum interest ratesPrice controls on gasoline in the 1970s
Instructions:Decide whether each is a price floor or price ceiling.Decide whether consumers or producers would favor the control.Produce a market graph illustrating the result of this price control.