Principles of Economics: Price Ceiling, Price Flooring and Cost Curve

Running head: PRINCIPLES OF ECONOMICS
PRINCIPLES OF ECONOMICS
Name of the Student
Name of the University
Author’s Note

1PRINCIPLES OF ECONOMICS
Table of Contents
Introduction......................................................................................................................................2
Question 1........................................................................................................................................2
Question 2........................................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

2PRINCIPLES OF ECONOMICS
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Shortage
Introduction
This assignment provides an overview on the principles of economics. The study focuses
on the concepts of price ceiling, price flooring and cost curve. The reason behind the
policymakers choosing to impose price ceiling or price flooring is elucidated in this assignment.
The second section of the study highlights on the reasons behind the average total cost curve
(ATC) being U- shaped. The study also discusses about the implications of this theory using any
practical reasons relating to a business.
Question 1
a)
Price ceiling and price flooring are price controls imposed by the government in free
market, which changes the market equilibrium. The government imposes price controls owing to
certain reasons but there are huge loss of efficiency with both of them (Frank & Cartwright,
2013).