Question

Explain the effect of a ‘price ceiling’.

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Answer 1

: The direct effect of a price ceiling may be termed as black marketing. It is a state, where the product under the government’s authority is illegally sold at higher rates than the price fixed by the government. It might be possible when a buyer is willing to pay in higher rates for the product than not to buy.

Answer 2

Explanation:

Price ceiling is practiced in an attempt to help consumers in purchasing necessary commodities which government believes to have become unattainable for consumers due to high price. However, price ceiling in a long run can cause adverse effect on market and create huge market inefficiencies. Some effects of price ceiling are