Price Elasticity

Price Floo

price floor

r

A price floor is a government-imposed minimum price set above the equilibrium price in a market. It is designed to protect producers by preventing prices from falling too low. When a price floor is set above the equilibrium price, it creates a surplus of the product, as the quantity supplied exceeds the quantity demanded at that price. This surplus can lead to unintended consequences, such as wasteful production and the need for government intervention to address the surplus.

Price Ceilin

inelasticity

g

Inelasticity: A situation where the quantity demanded or supplied of a product does not significantly change in response to a change in price.

perfect elasticity

Perfect elasticity refers to a situation where the demand or supply of a good or service is extremely responsive to changes in price. In this case, even a small change in price leads to an infinitely large change in quantity demanded or supplied. Perfectly elastic demand or supply curves are represented as horizontal lines on a graph. This means that consumers or producers are willing to buy or sell any quantity at a specific price. Perfect elasticity is a theoretical concept and rarely exists in real-world markets.

Unit Elasticity