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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Notes on "Binding and Non-Binding"

Key Terms

Binding Constraint

Typically a regulatory constraint that pre-empts market

equilibrium by setting different price level—price ceiling or price floor.

Non-binding Constraint

A pricing constraint that does not pre-empt market


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.

Producer Surplus

The difference between actual payment for a good and the

least amount a producer would have agreed to receive 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.