An Effective Price Ceiling Will

An increase in consumer surplus.

An effective price ceiling will. Use the production possibility curve figure 3 6. A price floor sets a minimum price that a good or service can be offered for in a marketplace and is usually set by the government. Therefore for the price ceiling to be effective it would need to be below 3.

Rationale behind a price ceiling. At a rental price of 6 there will be. A price ceiling happens when the government sets a legal limit on how high the price of a product can be.

Such conditions can occur during periods of high inflation in the event of an investment bubble or in the event of monopoly ownership of a product all of which can cause problems if imposed for a long period without controlled ratio. A price ceiling occurs when the government puts a legal limit on how high the price of a product can be. A price ceiling is a limit on the price of a good or service imposed by the government to protect consumers by ensuring that prices do not become prohibitively expensive.

Governments use price ceilings to protect consumers from conditions that could make commodities prohibitively expensive. An effective price ceiling will lower the price of a good which decreases the producer surplus. Price ceiling is practiced in an attempt to help consumers in purchasing necessary commodities which government believes to have become unattainable for consumers due to high price.

In order for a price ceiling to be effective it must be set below the natural market equilibrium. However price ceiling in a long run can cause adverse effect on market and create huge market inefficiencies. While they make staples affordable for consumers in.

Decreased total surplus. Use the dvd market figure 6 2. An effective price ceiling will most likely result in which of the following.