Explain why price ceilings are associated with shortages and why price floors are associated with surpluses.?

To my way of thinking, you need to first agree that supply and demand control the economic market. The market will set a price were supply equals demand. If there is "too much" of something available, the price will drop. If there is "not enough," the price will increase. Similarly, if "everyone wants it," the price will go up, if it is so last week, the price will drop.

A price ceiling messes up the natural equilibrium a market has. For example, if a price ceiling was placed on gasoline at, say $1.50 per gallon, more people would buy more of it. There would not be enough to go around. Additionally, it would make it more difficult to produce gasoline at a profit, so it would decrease the amount made. The result is that a price ceiling creates a shortage of the product.

A price floor would have the opposite effect. Using the same example, if the government suddenly said that the minimum price of gasoline was $4.00, less people would be able to afford it, less would be used, and a surplus of product would develop.

That really should be obvious, but I will explain it to you. When there is a shortage of something, retailers/suppliers tend to mark-up the product that is in shortage. If it is something desperately needed, say, like gasoline, they could mark it up tremendously, and people would still have to buy it. The price ceiling is then established to prevent retailers from marking the prices up beyond a certain amount. It prevents them from ripping off the consumer and taking advantage of their need.

Therefore, it is the opposite with a price floor, though I can't imagine that anyone would put a floor on a product.

If a cost ceiling is above equilibrium, that is ineffective because the seller can cost more suitable than what the product is valued (in words of the balanced value between the market of purchasers and sellers=equilibrium). and this has a adverse effect on the decision for for the product because it is going to bypass down because the object will change into larger in value than what purchasers are prepared to pay. If the cost ceiling is below equilibrium, it is likewise ineffective because the shopper is paying a lot less for the cost of the product, and this too would have a adverse effect because the sellers are having a lot less income, and inturn impacts its provide. If a cost floor is above equilibrium than purchasers are way overcharged in this poses many issues as products will be in scarce provide If a cost floor is below equilibrium, than sellers are negatively effected as they lose income because they don't look to be waiting to price as a lot, and this in turn impacts their ability to provide.