Floor And Ceiling Revenue

The domestic demand function is given by q 10 2 x p the domestic supply function is q 2 x p 2.

Floor and ceiling revenue.

Price ceiling maximum price the highest possible price that producers are allowed to charge consumers for the good service produced provided set by the government. Floor and ceiling revenue limits are defined in detail in the access undertaking. Start studying unit 4 elasticity price floors and price ceilings. The limits have been based on artc forecasted expenditures for 2008 09 as submitted to the accc as part of artc s application.

Price floor is typically proposed to ensure good income of people involved in farming agriculture and low skilled jobs. Price ceiling as well as price floor are both intended to protect certain groups and these protection is only possible at the price of others. The graph below illustrates how price floors work. Price floor and ceiling tax subsidy consider the market for butter in saudi arabia.

Price ceilings impose a maximum price on certain goods and services. The maximum level permissible in a financial transaction. A suppose there is a price ceiling of 2 sar. Learn vocabulary terms and more with flashcards games and other study tools.

A good example of this is the oil industry where buyers can be victimized by price manipulation. Ceiling refers to the highest price the maximum interest rate or the largest of some other factor involved in a transaction. Understanding the different methods businesses use to set budget ceilings will help you maintain flexibility in your spending without going into unmanageable. 2008 09 floor and ceiling revenue limits provided should be considered as indicative only.

It must be set below the equilibrium price to have any effect.