Price Controls

Price controls are government-imposed limits on the prices that can be charged for goods and services. They come in two main forms: price ceilings, which set a maximum price (to prevent prices from being too high), and price floors, which set a minimum price (to ensure producers receive a fair income). While price controls aim to protect consumers or support producers, they can lead to shortages or surpluses. For example, a price ceiling might result in low supply if producers find it unprofitable to sell at the lower price, while a price floor could lead to excess goods that can't be sold.