Final answer:
Ceiling and floor effects do not change demand or supply but affect the quantity demanded or supplied, potentially decreasing the sensitivity of the dependent variable when they prevent the market reaching equilibrium.
Step-by-step explanation:
Ceiling and floor effects refer to price controls implemented in a market. Ceiling effects occur when there's a set maximum price that can be legally charged for a good or service, known as a price ceiling. Similarly, floor effects are when there's a set minimum price, known as a price floor. These mechanisms do not affect the demand or supply curves directly but influence the quantity demanded or supplied.
Considering the sensitivity of the dependent variable, which is often the quantity demanded or supplied, such price controls impact the extent to which prices can adjust to their equilibrium levels. If a price ceiling is set above the equilibrium price or a price floor is set below it, they will have no effect because the market can naturally move to the equilibrium price. However, if these controls are set below or above the equilibrium price respectively, they can lead to shortages or surpluses, thus decreasing the sensitivity of the dependent variable because the market cannot reach equilibrium.