Low Price Ceilings

1
Low Price Ceilings
High Price Floors
Quantity Controls
Excise Taxes
2
Low Price Ceilings
3
Low Price Ceilings
Customers waiting in line
Suppliers out of the market
4
Customers who would have been happy to pay 2.10
Suppliers who would have been happy to sell at
2.10
A high price ceiling prevents mutually beneficial
transactions from taking place.
5
High Price Floors
Customers out of the market
Suppliers waiting in line
6
A high price floor prevents mutually beneficial
transactions from taking place.
7
Controlling Quantities
8
Excise Tax
Tax
Tax
Tax
Tax
9
Excise Tax
Customers pay 2 more than they did before the
tax.
Tax
Suppliers receive 3 less than before.