PPT Module 7_Interaksyon ng Demand at Supply- Price Control _Part 2

What is a price ceiling?

A legal maximum on the price that may be charged for a commodity.

What is a price floor?

A legal minimum on the price that may be charged for a commodity.

What is the effect of setting a price ceiling below equilibrium price?

It leads to a shortage of the commodity.

What is the effect of setting a price floor above equilibrium price?

It leads to a surplus of the commodity.

What does the Price Control Act (RA 7581) aim to accomplish?

It regulates the maximum and minimum prices to make basic commodities affordable.

What is a key problem associated with a price floor?

Chronic surplus of goods and potential unemployment when applied to minimum wage.

What is a black market in the context of price ceilings?

An illegal marketplace where goods are sold at prices above the price ceiling.

What is a cartel?

An organization of firms that coordinate to limit competition and set prices, such as OPEC.

What is the government's role in price control?

To legally restrict how high or low a market price can be.

What happens when a price ceiling is set significantly below the equilibrium price?

A shortage occurs, where demand exceeds supply.