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3 Tutorials that teach Binding and Non-Binding
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Binding and Non-Binding

Binding and Non-Binding

Author: Colton Cranston

This lesson covers the economics concepts of binding and non-binding.

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Terms to Know
Binding Constraint

Typically a regulatory constraint that preempts market equilibrium by setting different price level—price ceiling or price floor.

Consumer Surplus

Determined by the difference between actual price paid for a good and the highest amount a consumer would have paid for the good.

Deadweight Loss

The change in total surplus (sum of producer and consumer surplus) that results from the imposition of a binding constraint.

Non-Binding Constraint

A pricing constraint that does not preempt market equilibrium.

Producer Surplus

The difference between actual payment for a good and the least amount a producer would have agreed to receive for the good.