A price ceiling results in deadweight loss.

Question

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A price ceiling is a government-imposed restriction on how high a price can be charged for a certain good or service. When the price ceiling is set below the market equilibrium price, it creates a shortage of the good or service. This shortage creates a deadweight loss because some consumers who value the good or service above the ceiling price are unable to purchase it, while some producers who could have supplied the good or service at a higher price choose not to produce it because they cannot earn a profit at the ceiling price. This results in an inefficient allocation of resources and a loss of potential welfare for both producers and consumers.

A Price Ceiling Results in Deadweight Loss