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Does a price ceiling increase or decrease the number of transactions in a market? Why? What about a price floor?
The number of transactions will fall to Qs. Note that because both price floors and price ceilings reduce the number of transactions.
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Hello. So in this video, we're trying to figure out the question off, thus a price sitting increase or decrease the number of transactions in the market. Why? And what about a price for? So let's look at the facts off the price sitting first. So, um, suppose we have a market looking like this? Um, we put quantity on the excesses price on the Y axis. This is a supply curve. This is steady, man curve. And we have the original, um, equilibrium, quantity and, um, equilibrium price. So this equilibrium quantity is the number of transaction that we currently have. We found a price ceiling. Yeah. So a price. If that's a price ceiling, it's like this. We impose a price getting saying that the price of the market has to be lower than the current price. It cannot be hired. And this PC, And if that's the case, we can see because surprises are oh, lower. There would be less a supply and more demand and what is actually transaction ing right now, it's much lower than the origin or transaction, because there's not much. Not many supply available. But we do have a shortish no right because, um, there are much more demand than supply, but the transaction amount has decreased because the number of supply has decreased. OK, now let's look at this effect off a price floor. Um, press floor is basically the opposites off off price sitting right. So suppose that we impose a price floor. Let me see se pf The press floor is hired and occurring crew Librium Price. So basically, we ask, that's the price off. This good has to be hired and p e and he has to be. And this pf and with this higher price imposed for this good, there are more ah suppliers waiting to sell than the number off demand. And again because there are less people wanting to buy this fraud that the transaction number is this to lower. But because there are more people to supply, we have some extra goose available. So we have to Sofus. But what is actually transaction in right now is to deal lowered and the origin or transaction. Okay,
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