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| 1. |
What is price celling |
| Answer» Laws enacted by the government to regulate prices are called price controls. Price controls come in two flavors. A price ceiling keeps a price from rising above a certain level—the “ceiling”. A price floor keeps a price from falling below a certain level—the “floor”.\tPrice ceilings prevent a price from rising above a certain level.\tWhen a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result. | |