Price Ceilings

We all know that price ceilings keep prices artificially low and designed to help the poor, right? Well that might not be the case. Some economists argue that by looking deeper into price ceilings, the exact opposite happens. They claim that price ceilings actually keep prices artifically high, and when the ceiling is removed, the price goes down. This is because the ceiling creats an incentive for the producer not to supply too much of something, and this incentive is lost whent the ceiling is removed. So when the quantity supplied goes up, price goes down. This is the reason that some economists argue that price ceilings actually hurt the poor more than they help them. The ceilings create a price above equilibrium, which is even harder for the poor to pay. Add to this the shortage that a ceiling can cause, and the poor are worse off than before the ceiling. This shows that the invisible hand theorem is correct, that free markets really will maximize social welfare. For the entire article, go to: http://www.fee.org/vnews.php?nid=1081&printable=Y