What Is A Price Floor And A Price Ceiling. Pros Higher Income for Producers Higher Income for Labor Cons Higher Prices for consumers Encourage oversupply and Ineffeciency Higher Unemployment 13. What is a Price Ceiling.
It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price. A point to note is that a government may set both price floor and ceiling for a product. The price floor definition in economics is the minimum price allowed for a particular good or service.
These price controls are legal restrictions on how high or how low a market price can go.
Price Ceilings and Floors Price ceilings are usually government policies and limits that intend to save consumers from being charged too high a price. It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price. Price ceilings prevent a price from rising above a certain level. By observation it has been found that lower price floors are ineffective.
