Both a price floor and a price ceiling will reduce that amount of a good that is traded in the market.

Question

Quizplus · Accepted Answer

Price floors and price ceilings both create market inefficiencies by artificially altering the equilibrium price. A price floor sets a minimum price that is higher than the equilibrium price, resulting in a surplus of the good. A price ceiling sets a maximum price that is lower than the equilibrium price, resulting in a shortage of the good. In either case, the amount of the good that is traded in the market will be reduced.

Both a Price Floor and a Price Ceiling Will Reduce