A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Question

Quizplus · Accepted Answer

A price ceiling is binding if it is set below the equilibrium price, causing a shortage. However, if it is set above the equilibrium price, it is not binding and has no effect. Similarly, a price floor is binding if it is set above the equilibrium price, causing a surplus, but if set below, it is not binding. Both types of price controls can be either binding or not binding depending on their relation to the equilibrium price.

A Price Ceiling Is Always a Binding Price Control, Whereas