Unit 1: Price Ceiling, Price Floor, Business Cycles

Price Ceiling

• A legal maximum price meant to help buyers.

Example: Rent Control
Consequences:

• Lower Prices for consumers
• Shortages
• Long line for buyers
• Illegal sales above equilibrium price

Price Floor:
Legal Minimum price meant to help sellers; keeps prices from falling
Consequences:

• Higher Product prices
• Surplus
• Higher Taxes 
• Waste

Bussiness Cycles

Business Cycle

• Fluctuations in economic activity that an economy experienced over a period of time.

1. Expansion: Periods of economic upturn when output and employment are rising
2. Peak: Highest Point. This is the period in which business activity has reached the temporary maximum
3. Contraction: Period of decline in total output, income and employment
4. Trough: Lowest point. The economy goes from recession to depression.