Explain the effective price control

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Reference no: EM133082413

With the aid of supply and demand diagrams demonstrate that any and all effective price controls in a competitive market will reduce the actual quantity that can be traded (i.e. bought and sold) in that market.

SOME CLARIFYING COMMENTS FOR YOUR CONSIDERATION AS YOU WORK ON THIS ASSIGNMENT:

1. Note that an effective price control is one which forces a market to trade at a price that is different from the equilibrium price; thus an effective price control would be either a price ceiling below the equilibrium price, or else a price floors above the equilibrium price.

2. The key issue here is that nothing can be bought unless someone is willing to sell it, and nothing can be sold unless someone is willing to buy it

Reference no: EM133082413

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