Price controls affects the market in several ways. Producers, Retailers, and Consumers are impacted by price control based on the minimum and maximum price of goods and services. Selling products and services at the highest price (legally) may benefit sellers, but doesn't benefit buyers. Therefore, it's imperative to understand the buyers/sellers demand. Price controls have price floors and ceilings. The floor is the minimum price for a product or service. The ceiling is the maximum price for a product or service. Depending on where the producer or seller sets the price, the demand may be impacted. The last thing a producers or seller wants is to have high inventory count because they maximum the price to its ceiling.

The example I think of is building a home/resident. The builder has the duty of providing the labor for the service. However, the buyer has to pay for the labor and cost of materials. The builders cost of labor can range depending on the overall job, required skill, hours of labor. The buyer is greatly impacted by the builders price controls.

• How would you respond to the above statement?
• These are the questions asked: How do price controls affect the market? Provide a real-world example that takes consumer surplus and producer surplus into consideration.