Define price ceiling make consumers better off, Financial Management

How can a price ceiling make consumers better off?  Under what conditions might it make them worse off?

If the supply curve is completely inelastic a price ceiling will raise consumer surplus.  If the demand curve is inelastic, price controls might result in a net loss of consumer surplus as consumers willing to pay a higher price are not able to purchase the price-controlled good or service.  The loss of consumer surplus is greater as compared to the transfer of manufacturer surplus to consumers. If demand is elastic (and supply is relatively inelastic) consumers in the aggregate will enjoy a raise in consumer surplus.

Posted Date: 5/8/2013 2:29:52 AM | Location : United States

Related Discussions:- Define price ceiling make consumers better off, Assignment Help, Ask Question on Define price ceiling make consumers better off, Get Answer, Expert's Help, Define price ceiling make consumers better off Discussions

Write discussion on Define price ceiling make consumers better off
Your posts are moderated
Related Questions
Role of Government in the Financial Markets Many countries felt that the government should regulate certain aspects of the financial markets. Based on the history and culture o


The consolidated income statement for AB Group for the year ended 30 June 2010: (all amounts in the workings are in $000, unless stated otherwise)

Q. Explain about Loans - Forms of Bank Finance? When a bank makes an advance in lump-sum against some security it is called a loan. In Case of a loan, a specified amount is san

NPV and Other Criteria Waddington International Inc. has $20 million to invest. It is considering whether to build a new factory in Western Canada. The land and the building wil

Currently, many foreign firms from both developed and developing countries obtained high-tech U.S. firms. What might have motivated these firms to obtain U.S. firms? Answer: Se

1. It is mandatory that every carrier transporting hazardous materials should display correctly the emergency information panel. Emergency information panel should be legibly and

Explain the Types of Debt Securities There are many types of debt securities available in market.  The range includes Government Securities, Deep discount bonds, Deben

What are the basic requirements for a successful JIT inventory control system? For a JIT system to be booming the supplier must be willing and capable to deliver materials instan