Friday, February 15, 2013

Price Ceilings explained as simply as possible. Must know info for when the Mayhem Guy from AllState comes to visit your community...

When disaster looms or when it strikes there can be a significant disruption in the delivery of goods to that area.  We have learned about this from the recent natural disasters in the Northeast US (Hurricane in the Summer and Snow just recently).

When this happens there are usually price increases on vital goods, such as water, basic food staples, gasoline, batteries, etc.  When the prices rise there is the inevitable cry of "PRICE GOUGING!!" and people demand the government do something about it.

The obvious action would be for the government to impose Price Ceilings.  A Price Ceiling prevents sellers of goods from raising prices above "reasonable" levels---whatever that means exactly.

The imposition of Price Ceilings do have consequences.  I put this powerpoint presentation to help you (or your students) understand how they work to serve AND under serve the marketplace.

Let me know what you think. Thanks!

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