Floor And Ceiling Revenue

It must be set below the equilibrium price to have any effect.

Floor and ceiling revenue.

Ceiling refers to the highest price the maximum interest rate or the largest of some other factor involved in a transaction. Price ceiling as well as price floor are both intended to protect certain groups and these protection is only possible at the price of others. Floor and ceiling revenue limits are defined in detail in the access undertaking. A budget ceiling sometimes incorrectly referred to as a debt ceiling is a cap on business spending based on one or more formulas or limits set by a business.

They are usually put in place to protect vulnerable buyers or in industries where there are few suppliers. Price ceilings impose a maximum price on certain goods and services. The maximum level permissible in a financial transaction. Price floor is typically proposed to ensure good income of people involved in farming agriculture and low skilled jobs.

Governments will usually impose price ceilings when they believe that the equilibrium price in the market is too high and undesirable e g. Start studying unit 4 elasticity price floors and price ceilings. A good example of this is the oil industry where buyers can be victimized by price manipulation. Learn vocabulary terms and more with flashcards games and other study tools.

Price ceiling maximum price the highest possible price that producers are allowed to charge consumers for the good service produced provided set by the government. The domestic demand function is given by q 10 2 x p the domestic supply function is q 2 x p 2. A suppose there is a price ceiling of 2 sar. The limits have been based on artc forecasted expenditures for 2008 09 as submitted to the accc as part of artc s application.

The graph below illustrates how price floors work.