Price Ceiling and Price Floor
Price Ceiling
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- Legal maximum price meant to help buyers.
- Keeps the price from getting too high(prevents price gauging).
Consequences
- Lower prices for some consumers.
- Shortages
- Long lines for buyers
- Illegal sales above the equilibrium price
Price Floor
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- Legal minimum price meant to help sellers.
- Keeps the product price from falling.
- Higher product prices which helps the seller
- Surplus
- Higher taxes or higher government debt if they buy a surplus
- Waste
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