Maximum and Minimum Prices

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    Maximum Price A maximum price is a price ceiling, the market price cannot rise above it. A maximum price causes price to fall to Pā€™, quantity demanded to rise to Qd and quantity supplied to fall to Qs. Resultantly there is excess demand .

    A minimum price could be set by the government in an agricultural market to stabilize prices. Farmers are guaranteed a minimum price and the government buys up any excess supply. Below are the benefits and costs of an agricultural minimum price scheme:

     

     

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