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Price Ceilings, Price Floors, and Black Markets definitions

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  • Price Ceiling
    Government-imposed maximum on a product's price, restricting sellers from charging above a set limit.
  • Price Floor
    Government-imposed minimum on a product's price, preventing sellers from charging below a set threshold.
  • Equilibrium Price
    Market price where quantity supplied equals quantity demanded, with no external intervention.
  • Shortage
    Situation where quantity demanded exceeds quantity supplied, often resulting from price controls below equilibrium.
  • Surplus
    Condition where quantity supplied surpasses quantity demanded, typically caused by price controls above equilibrium.
  • Rent Control
    Regulation setting a maximum allowable rent, commonly used as an example of price ceilings in housing markets.
  • Minimum Wage
    Legally mandated lowest hourly pay for labor, serving as a classic case of price floors in labor markets.
  • Black Market
    Unregulated exchange occurring outside legal boundaries, often emerging due to restrictive price or quantity controls.
  • Rationing Coupon
    Government-issued permit allowing purchase of limited quantities at controlled prices during shortages.
  • Quantity Supplied
    Amount of a good producers are willing to offer at a specific price, influenced by market conditions and regulations.
  • Quantity Demanded
    Amount of a good consumers are willing to purchase at a certain price, shaped by preferences and price controls.
  • Market Equilibrium
    State where supply and demand intersect, resulting in stable prices and quantities without external interference.
  • Legal Maximum
    Highest price permitted by law for a good or service, enforced through government regulation.
  • Legal Minimum
    Lowest price allowed by law for a good or service, established to protect sellers or workers.
  • Inefficiency
    Loss of optimal allocation in markets, often arising from interventions like price ceilings or floors.