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Explain the meaning and implications of maximum price ceiling and minimum price ceiling. |
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Answer» Solution :When the GOVERNMENT imposes upper limit on the price of a good it is called maximum price ceiling. It is FIXED below the equilibrium price. Implication: It will lead to excess demand. This in turn may lead to black marketing of goods. When the government imposes lower limit on the price of a good,it is called minimum price ceiling. Implication: It leads to excess supply. This in TUM may lead to illegal selling below the ceiling price as the producers are not able to sell what they DESIRE to sell. |
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