Economics

Price Floor or Ceiling, Binding Or Unbinding?

This is an excerpt from my article on Macroeconomic Calculations.

If you get confused as to where you draw the line for a price floor or ceiling and whether its binding or unbinding then here is a good way to remember them, refer to the picture below. For an unbinding price ceiling and floor, picture a house with a floor and a ceiling, now lay the supply and demand graph over it. The unbinding price floor is below the equilibrium as you would assume the floor to be on the floor. The unbinding price ceiling is above equilibrium as you would assume the ceiling to be on the ceiling. For a binding price floor or ceiling, picture them as the opposite, picture a house with a floor and a ceiling, now the lay the supply and demand graph over it. The binding price floor is not below equilibrium as you would assume it is above, so the opposite. The binding price ceiling is not above equilibrium as you would assume it is below, so the opposite.

hoouse


Featured image supplied from Unsplash.

Copyright © 2016 Zoë-Marie Beesley

Creative Commons License Licensed under a Creative Commons Attribution 4.0 International License.

One comment

  1. Thanks for this blog post regarding price floors and ceilings; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: