Answer to Question #225364 in Microeconomics for Sindi

Question

Briefly explain by means of example the difference between a maximum price and a minimum price

Answer 1

A maximum price is experienced in cases where the government sets a legal limit on price of a product with the motive of lowering prices below the market equilibrium price.

For example, the government may set a maximum price of fuel to be 5 dollars

While minimum price is the lowest price that can legally be allowed by the government.

For example, Minimum price for alcohol or even agriculture