GK
MARKETING MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost & Expenses
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Supply & Demand
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Consumer Perception
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Competition
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Government
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Detailed explanation-1: -A price ceiling above the competitive equilibrium price will result in a surplus. A price ceiling below the competitive equilibrium price will result in a shortage.
Detailed explanation-2: -If the maximum price is set above the equilibrium price then it will have no effect. If the maximum price is set below the equilibrium price, it will cause a shortage – demand will be greater than supply.
Detailed explanation-3: -In general, price ceiling is imposed on essential items so that they are affordable for common people. In general, price floor is imposed to protect the interests of producers of a certain category. Price Ceiling is fixed at a level which is lower than the equilibrium price.
Detailed explanation-4: -Practical Example of a Price Ceiling In equilibrium, the price of rent is $1, 000 with a quantity of 100. Due to the extremely high demand for rental housing, the government decided to regulate the situation by imposing a price ceiling of $900.