Price Ceiling And Price Floor Questions

If the price is not permitted to rise the quantity supplied remains at 15 000.

Price ceiling and price floor questions.

The original intersection of demand and supply occurs at e 0 if demand shifts from d 0 to d 1 the new equilibrium would be at e 1 unless a price ceiling prevents the price from rising. Quiz questions will focus on topics such as binding price ceiling lines and the term given to how. A government imposes price ceilings in order to keep the price of some necessary good or service affordable. A price ceiling is a legal maximum price that one pays for some good or service.

The opposite of a price ceiling is a price floor which sets a minimum price at which a product or service can be sold. What does this graph show. Real life example of a price ceiling in the 1970s the u s. Price ceilings prevent a price from rising above a certain level.

For example in 2005 during hurricane katrina the price of bottled water increased above 5 per gallon. When a price ceiling is set below the equilibrium price quantity demanded will exceed quantity supplied and excess demand or shortages will result. This quiz worksheet combination will test your understanding of price ceilings and price floors. The next section discusses price floors.

Price floor and price ceiling draft. If a price floor was set at 320 what quantity would be purchased.