What is a price ceiling?

Show Answers

A government-imposed limit on the highest price sellers can charge for a productThe gap between the original equilibrium price and the new equilibrium price following a drop in supplyA government-mandated minimum price that sellers are required to charge for a productThe lowest price that buyers are prepared to pay for a product

Explanation

A price ceiling is a regulatory maximum price set by the government that restricts how much sellers can charge for a good. It is distinct from price floors or changes in equilibrium prices caused by supply shifts.