Floor Ceiling In Economics

Price floors and price ceilings are government imposed minimums and maximums on the price of certain goods or services.

Floor ceiling in economics.

A price ceiling is a type of price control usually government mandated that sets the maximum amount a seller can charge for a good or service. This is usually done to protect buyers and suppliers or manage scarce resources during difficult economic times. Government imposes a price ceiling to control the maximum prices that can be charged by suppliers for the commodity. Price ceiling has been found to be of great importance in the house rent market.

A price ceiling keeps a price from rising above a certain level the ceiling while a price floor keeps a price from falling below a certain level the floor. This section uses the demand and supply framework to analyze price ceilings. The next section discusses price floors. The floor functions as a lower limit while a ceiling signifies the upper limit.