Jim Whitney Economics 101
The economic effects of price controls

Price ceiling:                                                         Price floor:

Complete the price ceiling informaiton in the table below. The price floor information has been provided as an example:
 

 Price ceiling   Price floor
Free market Price ceiling Change   Free market Price floor Change
P* PC ---  price P* PF ---
24   --- quantity demanded  24 12 ---
24   --- quantity supplied  24 40 ---
---   --- suprlus/shortage --- surplus=28 ---
ABE     consumer surplus  ABE A  -BE
CDF      producer surplus CDF BCD  +B-F
ABCDEF     total welfare  ABCDEF ABCD -EF
 
 Price controls have a variety of predicted effects:
 1. Quantity shortages (with price ceilings) and surpluses (with price floors)
 2. "Non-price" rationing
 3. Cheating and evasion
 4. Product quality adjustments
 5. Welfare losses
 6. Wealth transfers