01 / Your decision
Which boxes get made?
In this fictional market, eight sellers can each prepare one lunch box today. None are made yet.
All sellers obey the ceiling. Costs include ingredients, packaging and time. Sellers can choose not to make a box.
Choose the sellers, then check your decisions. There is no penalty for trying again.
02 / Both sides of the counter
Wanting a box is only one side of a trade.
At the $3.50 price ceiling, 6 buyers want a box and 2 sellers offer one. Each buyer wants at most one box.
Coloured cards are willing to trade at $3.50. Grey cards sit out. Before the ceiling, 4 boxes were bought and sold.
Make your prediction before matching the market.
More buyers want a box. Fewer boxes are sold. A purchase needs a willing buyer and a willing seller.
The highlighted buyers are one possible allocation. The model does not decide who gets a box. It assumes both offered boxes find buyers.
03 / Put it into words
Explain the result.
Explain to yourself or a neighbour: why can a lower price make more people want to buy, yet lead to fewer purchases?
Now check a different possibility: what if the legal maximum is above the original market price?
Explore the graph and a different ceiling
The steps represent individual buyers and sellers. Their willingness to pay and costs do not change when you move the ceiling.
| Actual price | |
|---|---|
| Quantity demanded | |
| Quantity supplied | |
| Actually traded | |
| Shortage |
A maximum is a limit on what sellers may charge. Does it require them to charge that amount?
Independent practice / A new market
From lunch boxes to bicycle repairs.
A fictional repair market starts with 8 repairs per day at $40 each. A $25 price ceiling is enforced. After repair shops adjust:
| Repairs customers want to buy | 12 per day |
|---|---|
| Repairs shops are willing to provide | 5 per day |
Assume every repair offered finds a customer. Other influences on supply and demand are unchanged.
Use the two sides of the market to explain your choice.