2.11

Price Controls: Ceilings and Floors

AP Microeconomics

Price Ceilings

123456789101112123456789101112QuantityPrice ($)Eq.Qs=1.5Qd=7DSPrice Ceiling

Price ceiling at $3 creates a shortage: Qd (7) > Qs (1.5)

Effects of a Binding Price Ceiling

Deadweight Loss from a Ceiling

Price Floors

123456789101112123456789101112QuantityPrice ($)Eq.Qd=3Qs=7DSPrice Floor

Price floor at $7 creates a surplus: Qs (7) > Qd (3)

Effects of a Binding Price Floor

Comparing Ceilings and Floors

The Minimum Wage as a Price Floor

Worked Example: Rent Control

AP Exam Tips

  • •
  • •
  • •
  • •
  • •

Common Mistakes

  • •
  • •
  • •
  • •

Unit 2 topics

Unit 2 overview2.1Changes in Demand2.10Tax Incidence and Deadweight Loss2.11Price Controls: Ceilings and Floors2.12International Trade and Public Policy2.2Changes in Supply2.3Price Elasticity of Demand2.4Price Elasticity of Supply2.5Cross-Price Elasticity of Demand2.6Income Elasticity of Demand2.7Consumer Surplus2.8Producer Surplus2.9Market Equilibrium and Efficiency
← Previous2.10 Tax Incidence and Deadweight LossNext →2.12 International Trade and Public Policy
Practice AP Microeconomics questions →