Price floors and price ceilings often lead to unintended consequences, because buyers and sellers have many ways to react to price controls (what the textbook calls "many margins for action"). List four ways buyers or sellers react to price controls (i. e. "margins for actions") that lead to unintended consequences.

When price ceilings are set:

the quantity demanded will increase because customers will believe that the product is "cheap", e.g. rent control results in a larger demand for rental units. the quantity supplied will decrease because suppliers believe that they will not earn enough profit from selling the goods or services, e.g. rent control decreases the number of rental units.

When price floors are set:

the quantity demanded will decrease because consumers will consider that the products are "too expensive", e.g. a high minimum wage reduces the number of people employed.the quantity supplied will increase because suppliers will be making higher than normal profits, e.g. if the minimum wage is too high, more people will be willing to enter the labor force and search jobs.

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.