Explain the meaning and need for 'price ceiling’.

1.	Explain the meaning and need for 'price ceiling’.
Answer» When government imposes the maximum limit on the price of a commodity, it is called price ceiling. The ceiling is generally imposed on a good when the government feels that market-determined price is too high for a common man. The need for imposing ceiling arises mostly in case of necessary goods. Detailed Answer: Price ceiling: It refers to the maximum price of a commodity that the sellers can charge from the buyers. Often, the government fixes this price much below the equilibrium market price so that the essential commodities are within the reach of the poorer sections of the society. When ceiling price is lower than the equilibrium price, there is likely to be excess demand in the market and vice-versa.

Answer»

When government imposes the maximum limit on the price of a commodity, it is called price ceiling.

The ceiling is generally imposed on a good when the government feels that market-determined price is too high for a common man. The need for imposing ceiling arises mostly in case of necessary goods.

Detailed Answer:

Price ceiling: It refers to the maximum price of a commodity that the sellers can charge from the buyers. Often, the government fixes this price much below the equilibrium market price so that the essential commodities are within the reach of the poorer sections of the society. When ceiling price is lower than the equilibrium price, there is likely to be excess demand in the market and vice-versa.

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