Class 38: Price Floor and Price Ceiling

Today, Mr Rizzo talks about the idea of price ceiling by further using the example of house rent. It is not good to anyone of us, even if the reason is good to help the overall population, because it creates inefficient use of resources; we end up using taxpayer's money to build houses. Next, he talks about the price floor through the illustration of minimum wage. The principle works the same: we end up not creating new jobs but worsening the unemployment rate because of the surplus that we created by setting up a minimum wage.