Price ceilings and price floors

What this note covers

1. Binding versus non-binding price controls
2. Price ceilings: mechanism and consequences
3. Price floors: mechanism and consequences
4. Describing the ceiling and floor diagrams without an image
5. Comparing the two controls directly
6. Worked example: quantifying the shortage and welfare change
7. How price controls are examined and what separates a top response

7 sections · 12 key terms & formulas · 6 common mistakes