Administered Price


DEFINITION of 'Administered Price'

The price of a good or service as dictated by a governmental or other governing agency. Administered prices are not determined by regular market forces of supply and demand.

Examples of administered prices included price controls and rent controls. Administered prices are often imposed to maintain the affordability of certain goods and to prevent price gouging during periods of shortages (such as gas prices). Rent controls are intended to stabilize rent in certain cities, where rents are reviewed by a standard of reasonableness.

BREAKING DOWN 'Administered Price'

Price controls can specify a price ceiling (the upper limit of price) and a price floor (the minimum amount that can be charged for a good or service). Administered prices stabilize the costs of commodities such as sugar, staple foods, goods, and interest rates and fees, according to acceptable standards.

When supply and demand for the good change, the administered price may change to subsidize the supplier or protect the consumer.

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