Answer:
Price controls that exist in the economy include price floors such as minimum wage and price ceilings such as rent control.
Explanation:
Price controls are related to the laws enacted by the government to regulate prices are called price controls. There are two forms of price controls. The maximum price, which prevents the price from rising above a certain level — the "ceiling." The minimum price, which prevents the price from falling below a certain level — the "floor".
- Maximum prices (price ceilings) prevent a price from rising above a certain level.
- When a maximum price is set below the equilibrium price, the quantity demanded will exceed the quantity offered and the result will be either excess demand or scarcity.
- Minimum prices (price floor) prevent a price from falling below a certain level.
- When a minimum price is set above the equilibrium price, the quantity offered will exceed the quantity demanded and the result will be either oversupply or surplus.
- When government actions regulate prices rather than letting market forces determine them, this phenomenon is known as price control.
