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The Potential Effects of Price Ceilings
Our text defines a price ceiling as "a government imposed limit on how high a price can be charged," (Colander, 2004). Price ceilings can have detrimental affects on supply and demand. A price ceiling that is below equilibrium, as was the case in the simulation, causes shortages...
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This is due to the fact that prices are so low, consumers demand surpasses the quantity supplied. According to the simulation, price ceilings may have economic as well as social consequences such as increased deposit rates, and possibly even discriminatory practices.
Conclusion
This week's simulation provided working examples of several factors that effectively change supply and demand...
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