Floor And Ceiling Revenue

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

Floor and ceiling revenue. The limits have been based on artc forecasted expenditures for 2008 09 as submitted to the accc as part of artc s application. 2008 09 floor and ceiling revenue limits provided should be considered as indicative only. Start studying unit 4 elasticity price floors and price ceilings. Understanding the different methods businesses use to set budget ceilings will help you maintain flexibility in your spending without going into unmanageable.

Floor and ceiling revenue limits are defined in detail in the access undertaking. 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. The maximum level permissible in a financial transaction. The graph below illustrates how price floors work.

Price floor is typically proposed to ensure good income of people involved in farming agriculture and low skilled jobs. A budget ceiling sometimes incorrectly referred to as a debt ceiling is a cap on business spending based on one or more formulas or limits set by a business. They are usually put in place to protect vulnerable buyers or in industries where there are few suppliers. 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.

A suppose there is a price ceiling of 2 sar. The domestic demand function is given by q 10 2 x p the domestic supply function is q 2 x p 2. Price ceilings impose a maximum price on certain goods and services. 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.