Binding price control
Definition. A binding price control is a legally imposed maximum or minimum price set at a level that prevents the market from clearing, so it actually affects the equilibrium outcome. A binding price ceiling lies below the equilibrium price and a binding price floor lies above it.
A binding ceiling creates a shortage while a binding floor creates a surplus. A control set on the wrong side of equilibrium has no effect and is described as non binding.
This term belongs to Price Controls: Ceilings and Floors in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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