Price Ceilings and Floors
Supplementary resources by topic. Price Ceilings and Floors is one of 51 key economics concepts identified by the Council for Economic Education (CEE) for high school classes.
Price Ceilings and Floors
On this page:
Definitions and Basics
Price Controls, from the Concise Encyclopedia of Economics
Governments have been trying to set maximum or minimum prices since ancient times. The Old Testament prohibited interest on loans, medieval governments fixed the maximum price of bread, and in recent years governments in the United States have fixed the price of gasoline, the rent on apartments in New York City, and the minimum wage, to name a few. At times governments go beyond fixing specific prices and try to control the general level of prices, as was done in the United States during both world wars, during the Korean War, and by the Nixon administration from 1971 to 1973….
Rent Control, from the Concise Encyclopedia of Economics
Rent control, like all other government-mandated price controls, is a law placing a maximum price, or a “rent ceiling,” on what landlords may charge tenants. If it is to have any effect, the rent level must be set at a rate below that which would otherwise have prevailed….
Minimum Wages, from the Concise Encyclopedia of Economics
Minimum wage laws set legal minimums for the hourly wages paid to certain groups of workers. Invented in Australia and New Zealand with the admirable purpose of guaranteeing a minimum standard of living for unskilled workers, they have been widely acclaimed as both the bulwark protecting workers from exploitation by employers and as a major weapon in the war on poverty….
Agricultural Subsidy Programs, from the Concise Encyclopedia of Economics
Since the early 1930s, governments of wealthier countries around the world have used a dizzying array of schemes to support and subsidize farmers. In poor countries, where a large fraction of the population is engaged in farming, governments have tended to tax and regulate agriculture. As incomes grew and the population on farms dwindled in such countries as South Korea and Taiwan, those countries’ governments shifted from penalizing farmers to subsidizing them and protecting them from imports. These countries, along with Japan, now have among the highest subsidy and protection rates in the world. Forms of farm support also differ by country and commodity, and different forms have different impacts on agriculture and the rest of the economy.
In the News and Examples
Economists Debate the Minimum Wage, by Robert P. Murphy on Econlib
Rent controls in Mexico City: Tepito’s Way, by Ibsen Martinez on Econlib
However, in Maracaibo, Medellín, Caracas, Colon, Guayaquil or San Salvador, as in many other Latin American cities, “barrio” almost invariably is shorthand for “populous, dangerous and smelly sinkhole on the fringe of civil society.” There are, of course, other accepted though more complex meanings of the word. Consider Tepito, in downtown Mexico City….