What Is The Effect Of Maximum And Minimum Price Control Imposed By Government On Consumer Surplus And Producers Surplus?

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A price floor (Minimum Price) set above the market equilibrium price has several side-effects. Consumers find they must now pay a higher price for the same product. As a result, they reduce their purchases or drop out of the market entirely. Meanwhile, suppliers find they are guaranteed a new, higher price than they were charging before. As a result, they increase production.

Taken together, these effects mean there is now an excess supply (known as a surplus) of the product in the market. In order to maintain the price floor over the long term, the government may need to take action to remove it.
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Anonymous answered
In the case of maximum prices. Consumers gain from the price set artificially lower than the equilibrium price but there is a loss of consumer surplus welfare because of the reduction in the quantity traded.Therefore, there has been a reduction in economic welfare meaning that there has been a deadweight loss.

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