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A price floor can cause a surplus while a price ceiling can cause a shortage but not always.

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14y ago

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What causes a shortage of goods price ceiling or price floor Which causes a surplus?

if, at a current price there is a shortage of a good


What causes a shortage of a good - a price ceiling or a price floor?

if, at a current price there is a shortage of a good


How is a price floor different from a price ceiling?

Price floor is a minimum and price ceiling is a maximum.


How is floor price different from a price ceiling?

Price floor is a minimum and price ceiling is a maximum.


When are price ceilings and price floors binding?

A price ceiling is the legal maximum price at which a good can be sold, while a price floor is the legal minimum price at which a good can be sold. A price ceiling is only binding when the equilibrium price is above the price ceiling. The market price then equals the price ceiling and the quantity demanded exceeds the quantity supplied, creating a shortage of goods. A price floor is only binding when the equilibrium price is below the price floor. The market price then equals the price floor and the quantity supplied exceeds the quantity demanded, creating a surplus of goods.


How is price floor different from price ceiling?

A price floor is the minimum price set by the government where as a price ceiling is the maximum price sellers can charge for a good or service.


What is the definition of an effective price floor?

Government sets the minimum selling price and prices of goods are not supposed to fall below this price. This Causes Surplus and purchasers Overpay.


Markets with a ceiling price and floor price?

An example of a ceiling would be rent controlled apartments. A floor would be minimum wage.


Does a binding price floor cause a surplus in the market?

Yes, a binding price floor can cause a surplus in the market by setting the price above the equilibrium price, leading to an excess supply of the good or service.


What is one effect of a price floor?

A surplus of supply


Which causes the price of grain from the plains to fall?

A surplus in crops


What are the effects that price ceiling can have on a product?

a price ceiling results in a shortage because quantity demanded exceeds quantity supplied. it can increase consumer surplus but producer surplus decreases by more causing a deadweight loss in the market.