given that equilibrium is an imaginary state, if there are price controls (min. or max.) will there be equilibrium points above the min. or below the max. given changes in supply and demand? Or will the presence of controls always guarantee a shortage/surplus?
Secondly, don’t controls encourage the behaviors they are intended to prohibit -do max. prices encourage shifts in demand and min. prices encourage shifts in supply?
Thirdly in this world of regulated markets, is it possible for regulations to cancel each other out? Example: inflation nullifies minimum wages or taxes nullify subsidies?
May be, shortage queues may lead people to lessen their demand; and surpluses may lead suppliers to cut their supply(unless the govt. buys all surplus).
There will always be an equilibrium point. The equilibrium (theoretically) is where supply meets demand. There may be shortages or there may be surpluses. These are created (on a graph) when one line is shifted, without an equal shift in the other.
Yes, suppliers will supply less when there is a price floor. That is partly what creates this shortage. Most of time, in regards to surpluses and shortages, it’s a shift in the supply curve, not in the demand curve. For example, Europeans dump milk when they have surpluses (what they are currently doing, thanks to the European Milk Board, which has cartelized the industry).
Inflation can make high real wages affordable until the inflation ends, or there is hyperinflation. Taxes can nullify subsidies, only if the group being taxed are being taxed the same amount they are making through subsidies. But, governments aren’t that stupid (or, more accurately, the people lobbying aren’t that stupid).