1. Price Controls

2. Price Controls Surplus
When quantity supplied is greater than quantity demanded
Often results in producers dropping their prices on goods
The invisible hand forces down prices to reach market equilibrium
Shortage
When quantity demanded is greater than quantity supplied
Invisible hand forces prices up; as consumers are less willing to pay the elevated prices

3. Price Controls Price Ceilings
The maximum price a seller is allowed to sell their good for
Usually a law or regulation to help maintain fair business practices
Set below the market equilibrium price
1970s gasoline prices

4. Price Controls Price floors
The lowest price a seller can supply a good or service
Often a law or regulation to ensure that prices do not drop too low
In order to be effective, the price floor is set above the equilibrium price
EX: Corn production
Farmers makes a lot, the price is really appealing
Doesn’t help producers since consumers do not want the goods
What happens to the surplus??

5. What happens to the surplus?

6. Rent control for Colorado?
1) Read the Opinion article about why Colorado needs rent control, then answer the following questions:
Is rent control a price ceiling or price floor?
What does rent control create for the market? (surplus/shortage)
Do you agree or disagree
Why? How would this effect you? What does the future look like when you want to rent? (hint: that’s in a few years for most of you!)
2) Read the article why rent control may never be a thing for Coloradoans, then answer the questions:
What problems can you understand from rent control?
Do you still thing rent control is right or wrong?
What does the rental market look like in the long run without rent control?
Is this a natural side-effect? Will the market correct itself?