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Can a non binding price control become binding?

Price controls can be thought of as “binding” or “nonbinding.” A nonbinding price control is not really an economic issue, since it does not affect the equilibrium price. If a price ceiling is set at a level that is higher than the market equilibrium, then it will not affect the price.

Also to know is, how could a non binding price ceiling become binding?

In general, a price ceiling will be nonbinding whenever the level of the price ceiling is greater than or equal to the equilibrium price that would prevail in an unregulated market. For competitive markets like the one shown above, we can say that a price ceiling is nonbinding when PC >= P*.

Subsequently, question is, what is a binding and non binding price floor? A price floor or minimum price is a lower limit placed by a government or regulatory authority on the price (per unit) of a commodity. Nonbinding price floor: This is a price floor that is less than the current market price. Binding price floor: This is a price floor that is greater than the current market price.

Thereof, what is binding and nonbinding?

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The difference between binding and nonbinding is simple. Binding means you’re legally bound to something, while nonbinding means you aren’t. Typically in legal circles, these terms apply to things like arbitration decisions and contracts.

What makes a price ceiling binding?

A binding price ceiling occurs when the government sets a required price on a good or goods at a price below equilibrium. Since the government requires that prices not rise above this price, that price binds the market for that good.

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