Price Floor Graph Economics. It is used by the government to prevent the prices from hitting a bottom low. Dec 04 2019 The three main profit margin metrics.
A price ceiling legally prohibits sellers from charging a price higher than the upper limit. It is used by the government to prevent the prices from hitting a bottom low. Rent control and deadweight loss.
The graph below illustrates how price floors work.
Mar 17 2019 Price ceiling also known as price cap is an upper limit imposed by government or another statutory body on the price of a product or a service. A price floor is said to exist when the price is set above the equilibrium price and is not allowed to fall. Although both a price ceiling and a price floor can be imposed the government usually only selects either a ceiling or a floor. It tends to create a market surplus because the quantity supplied at the price floor is higher than the quantity demanded.
