Price Ceilings
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
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
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Common Mistakes
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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