Interactive simulator
Price Ceiling and Shortages Simulator
A price ceiling is a legal maximum price set below the equilibrium price. This simulator places a ceiling line on a supply-and-demand graph: quantity demanded rises along the demand curve while quantity supplied falls along the supply curve, and the gap between them is the shortage. Move the ceiling up and down to see how a ceiling closer to equilibrium shrinks the shortage, and how a non-binding ceiling (set above equilibrium) has no effect. In this release this page is powered by the closest available interactive widget; a dedicated widget for this topic is planned.
Equilibrium solves Qd = Qs, so P* = (a − c) ÷ (b + d). Shifting demand changes a; shifting supply changes c. A ceiling only bites when set below P* (creating a shortage); a floor only bites when set above P* (creating a surplus).
How to use it
Drag the price-ceiling slider below the equilibrium price.
Read the quantity demanded at the ceiling price on the demand curve.
Read the quantity supplied at the ceiling price on the supply curve.
The gap between them is the shortage; raise the ceiling and watch it shrink.
What you will learn
- Explain why a binding price ceiling creates a shortage.
- Distinguish binding from non-binding price controls.
- Relate price ceilings to rent-control debates.
Model notes
Linear curves and a single static market are assumed. The model does not show black markets, quality deterioration, or long-run supply contraction, all of which economists associate with prolonged ceilings. No real market data is used.