Applications of Demand -Supply Diagram:

Price Control

Whenever the forces of demand and supply are allowed to fix market prices of commodities in a competitive market, some of the prices may be unfairly high to buyers or unfairly low to sellers. In such instances, the government may attempt to regulate or limit prices through legislation. Price through legistation. Price controls prevent markets from moving to equilibrium. Price controls are in the form of either maximum price (price ceiling) or minimum price (price floor).