What Is a Price Ceiling?
A price ceiling is a legal maximum price.
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In this lesson you learn to
- Define a price ceiling as a legal maximum price
- Explain why a ceiling below the market price causes a shortage
- Work out a shortage in a model market
- Describe effects and a historical case without taking a policy side
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1.What is a price ceiling?
A price ceiling is a legal maximum price.
2.When does a price ceiling lead to a shortage?
A ceiling below the equilibrium makes demand exceed supply.
3.What is a shortage?
A shortage is the quantity demanded minus the quantity supplied.
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Sources (4)
- OpenStax: Principles of Economics 3e (Greenlaw, Shapiro, MacDonald, 2022), Kap. 3.4 Price Ceilings and Price Floors
- Aphrodisias Excavations (NYU/Oxford): Diocletian's Price Edict
- Lactantius: Of the Manner in Which the Persecutors Died (De mortibus persecutorum), Kap. 7 (New Advent, englische Uebersetzung)
- Eigene Berechnung (Modellmarkt)
Education only. Not financial advice.