MT445 Unit-2 Discussion
Description
Topic: Effects of Price Controls on Market Equilibrium
One method of government intervention in markets is price controls. The government intervenes to regulate prices by imposing price controls, which are legal restrictions on how high or low a market price may go. Price ceiling is the maximum price sellers are allowed to charge for a good or service. Price floor is the minimum price buyers are required to pay for a good or service.
Higher education has become increasingly expensive and now costs much more than it did before. One of the ways the government controls prices is by setting a floor or a ceiling on the market.
Explain what might happen in the market for higher education if the government placed a price ceiling on the cost of one undergraduate credit hour. Explain your answers using economic theory on impacts of price ceiling on market equilibrium.
Discussion Checklist:
In your words, define “price ceiling” and discuss the impacts of setting a price ceiling in the education industry.
Does it matter whether the ceiling is set above or below the equilibrium price?
Who may benefit and who may be harmed from the price restriction?
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