Explain the difference between a price floor and a price ceiling. Provide a situation in which a price ceiling may be used.
What are the effects of this price control on the equilibrium price and quantity?© BrainMass Inc. brainmass.com October 10, 2019, 2:28 am ad1c9bdddf
A price floor means that you cannot charge less than the price floor. This doesn't constrain the upper price at all. So, the price can vary as long as it stays above the floor.
A price ceiling means that you cannot charge more than the ceiling price. So, the price can go as low as the market likes but it can not rise above this level.
In some markets, the floor and ceiling never really impact the market (called ...
This solution discusses the differences between a price floor and a price ceiling.