Choke Price

Definition of 'Choke Price'


An economic term used to describe the lowest price at which the quantity demanded of a good is equal to zero. At any price below the choke price, consumers will demand some quantity of the good. At any price equal to or above the choke price, consumers will not express any demand for the good.

Investopedia explains 'Choke Price'


By using a demand schedule and/or demand curve, a company can see where the choke price is as well as the differences in the quantity of a good that consumers will demand at different prices. For example, consumers might purchase 200 units of a good at $40, 1,000 units of a good at $20 and 2,500 units at $10, but zero units at $50. Therefore, $50 would be the choke price. The term "choke price" is typically used in discussions of nonrenewable resources.



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