Changes

'''7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.'''

'''7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.'''

The supplier will find that it is not worth their time to make a product when the imposed ceiling is set unrealistically low by the government.  This causes a shortage since the public will line up for a bargain price.   

The supplier will find that it is not worth their time to make a product when the imposed ceiling is set unrealistically low by the government.  This causes a shortage since the public will line up for a bargain price.  On the graph the price ceiling is set far below the equilibrium point.   

[[''''''Aran M.'''''']]

[[''''''Aran M.'''''']]