The document discusses governmental imposition of price controls through price ceilings and price floors and their effects on market equilibrium. [1] A price ceiling sets a maximum price that can be charged for a good and often results in a shortage if set below equilibrium price. [2] A price floor sets a minimum price and often leads to a surplus if set above equilibrium price. [3] Both price ceilings and floors can introduce inefficiencies in the market allocation of goods and resources.

1. Presented By Mayank Jain Sem 1, MBA 2010-12 DOMS IIT Roorkee

2. Governmental Impositions on the Prices Charged. Determinant on how High or Low Prices can go.

3. Policymaker believe Market Price Unfair to Buyer or Seller Affordability of Staple Food During Crisis Time An Attempt to alter the Equilibrium

4. Price Ceiling - Max Price that can be Charged for a Good. Price Floor - Min Price that is Required to Pay for a Good

5. Equilibrium Price Ceiling D Quantity Price 3 2 200 4 S 100 D Quantity Price 3 2 200 300 4 S 100 Price Ceiling

6. Equilibrium Price Ceiling D Quantity Price 3 2 200 4 S 100 D Quantity Price 3 2 200 800 4 S 100 Shortage Price Ceiling

8. Missed opportunities thus Inefficient market economy Inefficiency Introduced Inefficient Allocation to Consumers Wasted Resources Inefficiently Low Quality Black Markets Supply side Pressure Discrimination based on Supplier Bias

9. Price Floor is a minimum price buyer are required to pay for a good. The minimum wage is a legal floor on the wage rate.

10. ` Equilibrium Price floor D Quantity Price 3 2 200 4 S 100 D Quantity Price 3 2 200 600 4 S 100 Surplus Price Floor

11. Inefficient allocation of sales among Sellers Wasted Resources

12. People Responds to Incentive Market are Usually a Good Way to Organise Economic Activity Government can Sometime Improve Market Outcome

13. Price control more often then Not Hurts Economy and Society if persisted for Long

14. Mayank Jain [email_address]