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Sagot :
A price ceiling is a price set by the government to control or restrict the amount that can be charged for a product, whereas a price floor refers to a minimum price set by the government for a good or service. Price ceilings and floors are both examples of government interference. The market price would end up being either lower or higher than the equilibrium price, if efficient resource allocation is assumed. A lower price leads to an excess of market requests, while a higher price results in an excess of market supplies.
- Desired and the quantity of goods supplied. If that doesn't happen, the price will drop since the sellers will have more product than customers want to buy at a given price. Similar to this, prices will rise if a market does not have access to enough of a good to meet consumer demand. Price ceilings and floors now serve to avoid price changes that would otherwise be necessary to balance these imbalances. The sellers will create more than the market can support if a price is set above equilibrium (i.e., a price floor), diverting resources away from more highly valued uses. Price caps would result in inadequate allocation.
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