Markets seek equilibrium, and the demand for goods and services will come to an equilibrium with supply of goods and services.When markets are not in equilibrium, surpluses and shortages, as well as underground markets, can exist.Sometimes, the government may want to intervene in markets to try to help reduce economic hardships.

What is the difference between a price floor and price ceiling?

Review the mechanics of supply and demand.Disequilibrium between supply and demand will occur if price is above (surpluses) or below (shortages).

Why does a price floor lead to surpluses?

Why does a price ceiling lead to shortages?Review consumer and producer surplus.A price floor will lead to a transfer of consumer surplus to producer surplus; a price ceiling will lead to a transfer of producer surplus to consumer surplus; both price regulations lead to dead

weight losses, which is a loss of surplus to society.Why?