Question

explain the effect of price ceiling and price floor...!!!! urgent

Answer 1

A price ceiling is the maximum price a product can be charged according to the government. If the price ceiling is set below the equilibrium price, this is known as a binding price ceiling. In this case, there will be a shortage of the product since even at the maximum price set, demand will exceed supply. If the price ceiling is set above the equilibrium price, it is known as a non-binding price ceiling. It is possible for a surplus of the product to occur if the price being charged for the product is between the equilibrium price and the price ceiling................................
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