ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A price ceiling, aka a price cap, is the highest point at which goods and services can be sold. It is a type of price control and the maximum amount that can be charged for something. It often is set by government authorities to help consumers, when it seems that prices are excessively high or rising out of control.

Detailed explanation-2: -A price ceiling is the maximum price of a good which sellers can expect from buyers. This price is fixed by the government and is lower than the equilibrium market price of a good(OPe). Hence, the price ceiling leads to the excess of demand and contract of supply.

Detailed explanation-3: -A price ceiling keeps a price from rising above a certain level-the “ceiling”. A price floor keeps a price from falling below a certain level-the “floor”. We can use the demand and supply framework to understand price ceilings. In many markets for goods and services, demanders outnumber suppliers.

Detailed explanation-4: -Minimum price ceiling refers to the least price that can be paid for any good or service. Also read: Difference Between Price Ceiling and Price Floor. Market Equilibrium.