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Price Floors and Price Ceilings

Price Floors and Price Ceilings. Price Ceiling. Maximum legal price a seller may charge for a product or service At price at or below the ceiling is legal; a price above is not Protects consumers Price ceilings cause shortages Ex: Rent Controls. Price Floors.

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Price Floors and Price Ceilings

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  1. Price Floors and Price Ceilings

  2. Price Ceiling • Maximum legal price a seller may charge for a product or service • At price at or below the ceiling is legal; a price above is not • Protects consumers • Price ceilings cause shortages • Ex: Rent Controls

  3. Price Floors • Occurs when the government sets a MINIMUM price that producers will charge • A price at or above the floor is legal; a price below is not • Protects producers • Price floors creates a surplus • Ex: Agriculture

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