Examples Of A Price Ceiling

For example in 2005 during hurricane katrina the price of bottled water increased above 5 per gallon.

Examples of a price ceiling. It may change the ceiling formula or review the profit conditions of a firm. An example is a price ceiling on apartment rents which some cities impose on landlords. The opposite of a price ceiling is a price floor which sets a minimum price at which a product or service can be sold.

Price ceilings set the maximum price that can be charged on a product or service in the market. In absence of any price ceiling the equilibrium price is 3 per unit at a point where quantity supplied equals quantity demand. At the ceiling price of 900 quantity demanded is 110 while quantity supplied is 90.

If the government sets a price ceiling of 15 per unit for this good the quantity demanded will be 3 500 units whereas the quantity supply will be 1 500 units. Consequently some consumers will not be able to buy the quantities they want. Real life example of a price ceiling in the 1970s the u s.

Consider a hypothetical market the supply and demand schedules of which are given below. Examples of price ceilings include rent control in new york city apartment price control in finland the victorian football league ceiling wage state farm insurance in australia and venezuela s price ceilings on food. As a result many people called for price controls on bottled water to prevent the price from rising so high.

For instance if the government sets the ceiling for potatoes at 5 per pound but the equilibrium price for potatoes is already 4 per pound this would have no real effect on the price of potatoes. Let s say gotham city sets a price ceiling of 1 000 for a one bedroom apartment where landlords cannot legally charge higher than that rate. Price ceiling so you inherited a house when your grandfather passed away.

Due to the extremely high demand for rental housing the government decided to regulate the situation by imposing a price ceiling of 900. You decided to lease the house to a family for 600 per month. That family in turn sub leases the house perhaps without.