Principles of Macroeconomics / Unit 2 MAC 0120 short lesson, about 20 seconds
Price Ceilings
Captions available
The idea
A price ceiling is a legal maximum price. Set below equilibrium it binds and creates a lasting shortage, because the price cannot rise to clear the market.
In practice
At the capped price buyers want more than sellers will offer, and the gap does not close.
Where people slip
Set above equilibrium a ceiling does nothing: the market price is already below it.
Your place on the trail
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