The price manage is constraints on prices by government to maintain affordcapacity of vital product, to combat inflation or to encertain a minimum revenue for the producers and also suppliers of the good. The price controls can be of two kinds, price floor and price ceiling. The price celling is restricting price listed below equilibrium price to encertain the affordability of the excellent. Price floor is restricting price over equilibrium price to encertain minimum revenue for the producers and service providers of the great.




You are watching: Do producers tend to favor price floors or price ceilings? why?

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Video Transcript

the question. I ask what the firm prefers. A price war price ceiling. So ruin, grab initially help. Wanted to help. Price. We have demand crew supply, Kurt. Okay, So based upon supply and demand also in the market, yeah, they dubbed Rome itself. We will certainly get to a Upton. More marketing Coburn price and industry reports on the tea that in some situations, federal government will manage the market by sfinishing a price battle price ceiling. So ask first thing about price war. So Eve, the price war is listed below Penis Whitman. Price. Let's say this is a price battle, so that doesn't matter, bereason price heat is that on the price, and the market deserve to be completed around that price. So if they Quinn price is greater than the price war than actually the sector, canst you attain this equal room. And for the producer, simple is tbelow will be no adjust. But ive the price war is higher than the equilibrium prize achieved by the sector. Then something will obtain changed. First point is bereason the price war is higher than the Ekuban Christ present. The prices and also market is specifically this price war. So, um, because of this price war, The amount will be to f. That implies for the consumer. Consumer samples is only the sport is the the majority of most basic. But producer surploffers this large right here. Okay, this is a producer surplus. So basically, you have the right to see that if the apparel at a price war, either the producer will certainly not change and also lacking that is the price is the star or the producer will certainly acquire some bandits. It's so This is price war and also about price silly. You have wanted Thio Price And don't we have actually demand also curve and supply treatment and only aid the equilibrium prize that have to buy the sector itself. And I think around Presley. Price marketing is the highest possible possible price that have the right to be charged in the sector. So if the price selling is greater than the Christ, that's so this is price something. Then there will be no adjust in the market because, um, the tantamount price deserve to still be adjusted. And they dubbed him amount also be changed so the market deserve to steal it, she redubbed. Berm, the producer simple does not change. But if the price selling is lower than the indistinguishable price, so here's a price something and prices is the highest possible possible price that can be charged in the industry. That in this case, bereason Mark because the price is also low, we view that decision upon a couple of seats. That suggests bereason of supply in the market is exceptionally low. So basically this component will certainly be the user intended, and also this big location be customer meant so basically, the firm will certainly like price floor because Price human being have the right to either make the producer better off or make it at the exact same as previously. But price silly deserve to make probably make that make the producer verse off if the price ceiling is lower than the Coupe of Christ.