Imagine the government required Apple, Inc. to sell its latest iPhone (regular $800) for $300. Is the new $300 price a price floor or a price ceiling? Explain. What would happen to the quality of iPhones? Explain. What would happen to the availability of iPhones? Explain.

Imagine the government required Apple, Inc. to sell its latest iPhone (regular $800) for $300. Is the new $300 price a price floor or a price ceiling? Explain. What would happen to the quality of iPhones? Explain. What would happen to the availability of iPhones? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Imagine the government required Apple, Inc. to sell its latest iPhone (regular $800) for $300.

1. Is the new $300 price a price floor or a price ceiling? Explain.
2. What would happen to the quality of iPhones? Explain.
3. What would happen to the availability of iPhones? Explain.

Video Definition Video Definition Government regulation setting a maximum price a business may charge for a given good or service. A price ceiling itself does not cause demand or supply to change. It is simply a mechanism used to set a price that can be legally charged in the market. Price ceilings are often implemented during times of crisis to avoid price gouging.

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