price ceiling problem

price ceiling

A price ceiling is a government-imposed limit on the price charged for a product. Governments intend price ceilings to protect consumers from conditions that could make necessary commodities unattainable. However, a price ceiling can cause problems if imposed for a long period without controlled rationing. Price ceilings can produce negative results when the correct solution would have been to increase supply. Misuse occurs when a government misdiagnoses a price as too high when the real problem is that the supply is too low. In an unregulated market economy price ceilings do not exist. Students may incorrectly perceive a price ceiling as being on top of a supply and demand curve when in fact, an effective price ceiling is positioned below the equilibrium position on the graph.

price floor

A price floor is a government- or group-imposed limit on how low a price can be charged for a product.[1] For a price floor to be effective, it must be greater than the

tenant

An individual or business which has possession of and pays rent for real estate owned by another party (called the landlord).

rent control

Government restriction, applicable to rental units in certain areas, in which a maximum is placed on the amount a landlord can charge a tenant. Rent control is a price ceiling imposed by the government, and is in place in many areas across the world. The practice is controversial, as some people believe it is necessary in order to prevent tenants from paying unfair rents and in order to allow as many individuals as possible access to good housing, while others feel that it could create a housing shortage due to increased demand, that a rent control situation will decrease the quality of available housing, or that it is simply unfair to the property owners. Read more: http://www.investorwords.com/4178/rent_control.html#ixzz1LG6RZBr1

price mechanism

Price mechanism is an economic term that refers to the buyers and sellers who negotiate prices of goods or services depending on demand and supply.[1] A price mechanism or market-based mechanism refers to a wide variety of ways to match up buyers and sellers through price rationing. An example of a price mechanism uses announced bid and ask prices. Generally speaking, when two parties wish to engage in a trade, the purchaser will announce a price he is willing to pay (the bid price) and seller will announce a price he is willing to accept