A price ceiling is a legal maximum price set below the equilibrium price in a market. This is done to make goods or services more affordable for consumers who may not be able to afford them at the market price. However, this often leads to a shortage of the good or service since suppliers cannot make a profit at the lower price.

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A Price Ceiling Is

Question 76

Multiple Choice

A price ceiling is:

A) the minimum legal price that can be charged in a market.
B) the maximum legal price that can be charged in a market.
C) above the initial equilibrium price.
D) equal to the initial equilibrium price.

Correct Answer: