Price Ceiling S D Price Quantity Qs Qd Market-clearing price

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Presentation transcript:

Price Ceiling S D Price Quantity Qs Qd Market-clearing price Legal price ceiling set below market price

Price Floor Price Quantity Qd Qs D S Legal price floor set above market price Market-clearing price

Class Activity Minimum wage Agriculture price minimums Rent control “Usury” laws on credit card loans, setting maximum interest rates Price 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.