Question

what is price ceiling???? superb ans... with dia?????

Answer 1

Heya......

Price ceiling.......

It is done by govt in the situation of excess demand and less supply....

It refers to the maximum limits of price that a producer can charge for his product to the consumer...

It is done to avoid the consumer exploitation in case of excess demand....

Price ceiling is done below the equilibrium prices....

@@ It's implications are.....

** It avoids the black marketing during excess demand....

** It creates a positive situation of purchasing in economy...

@@ For diagram see the attachment....

Answer 2

Price Ceiling is the act of government to fix the price at a certain point where the suppliers are legally obliged to sell at or below that point. It is often called maximum price since the price of the product in the market should not exceed this point. The main reason for the setting of maximum price in a product is to save the consumers from paying higher price specially for the necessity goods such as rice,cooking gas,water,electricity,etc if the government think that the market price for this goods are very expensive and too far above the market equilibrium. And thus help consumers enjoy the goods at affordable rates. The problem that arises with price ceiling is that due to lower prices the quantity supplied for the good decreases(contracts) and quantity demanded for the good increases(extracts). Hence desirable production and consumption doesn’t take place in the market leading to economics inefficiency. For example, people may have to wait for many days for arrival of cooking gas for their households due to less production and increasing demand.