Can you think of any commodity on which price ceiling is imposed in India? What may be the consequence of price-ceiling?
Answers
Answer:
Explanation: Answer to the first part of the question.
Price ceiling refers to the situation where the price charged is higher or lower than the equilibrium price. The price is arrived by taking into account the demand and supply forces in the market. The main motive of imposing price ceiling by the Government is to keep a check on the maximum prices of the commodity that is charged by the suppliers . This makes the commodity affordable for the consumer, however in some cases it leads to unrest and black marketing in the supply side.
In India there are certain commodities where the Government to impose a price ceiling. For example wheat, kerosene, sugar, wheat, rice, etc.
Answer to the second part of the question.
Some of the consequences of price ceiling are as follows;
- Price ceiling leads to fixed quantity for the consumers. The fixed quantity makes consumer short of his/her is requirement.
- Commodities which come under the price ceiling are often found to be of inferior quality and adulterated.
- Price ceiling often leads to black marketing. As the consumers needs are not fully met in terms of quantity, they are often seen to pay a higher price to get the additional quantity. This brings both artificial shortage and black marketing.
Hope this helps