Price Ceilings and Price Floors

1. Supply and Demand: Price
Ceilings and Floors
Mr. Geib and Mr. Fitz-Patrick
12th Grade Economics

2. Supply and Demand
Inverse relationship between the two.

3. Surpluses, and Response
Price is too high: “ON SALE!”

4. Shortages, and Response
Price is too low: Lines and shortages.

5. The Road to Hell is Paved…
• Price floors
– Affordable housing
– Command
Economy
• Government price
controls
• Soviet Union,
Venezuela
• Minimum Wage
– The intent, the
effect
Ignoring the rules of supply and demand!

6. The Road to Hell is Paved…
• Price ceilings
– American food policy
• Subsidies
– Overseas aid
• Nicaragua and
Nigeria
– Ignoring the rules of
supply and demand!

7. Bottom Line?!?
One cannot ignore the iron economic laws of supply and demand?
As opposed to politicians,
economists would say that there are
always tradeoffs in economic policy,
and that there is no such thing as a
“FREE LUNCH.”