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
Parity Conditions A parity condition defines the relative value of one country's currency to the other country's currency. The condition states how, for the example, difference

Explain and critically evaluate : a)  The relevance of committed fixed costs in deciding the optimal mix of products to maximum a company's profit and the importance of relevant

Q. Evaluate of Risk-Adjusted Discount Rate? Illustration: - From the following date state which project is preferable: Year Project A Proj

Observed yield on strips can be used to construct an actual spot rate curve, but it is not free from drawbacks. There are some problems with this; first, the liqu

The price charged when one segment of an organization provides goods or services to another segment of the organization.

The Selling Process The four key elements that constitute the selling process are: (i) identification of prospective buyers, (ii) selection of the type of selling process to be

which critically examines the benefits and risks to a company, of incorporating corporate debt into a portfolio of equity and debt.

Federal Reserve Board The Federal Reserve Board controls the nation's monetary policy, regulates banks, and searches to keep the financial stability of the United States. Its t

Equity Theor y This theory proposes that individuals measure their out- comes/input ratio. Equity theory distinguish that inspiration is not the outcome of an absolute

Types of Mutual Funds The objectives of a Mutual Fund are as follows: To provide an opportunity for lower income groups to acquire property without much difficulty in the