Definition
Price ceilings set maximum prices, while price floors establish minimum prices.
Political Dictionary
Price Controls
Price controls are government limits on how high or low prices may be.
Why It Matters
They may protect consumers or producers, but can create shortages, surpluses, quality changes, or informal markets.
How It Works
Officials set legal price limits and enforce them through penalties or regulation.
History
Governments have used price controls during wars, inflation, housing shortages, and agricultural policy.
Example
Rent control limits increases for covered housing units.
Common Misconceptions
- Price controls eliminate scarcity.
- Every price ceiling lowers total costs without side effects.
- Minimum wage is unrelated to price floors.
Related Terms
- Fiscal Policy
- Monetary Policy
- Inflation
- Economic Growth
- Government Spending
Related Topics
See Also