If price ceilings do not allow prices to rise, then demanders will be unable to signal their needs to suppliers.

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Price ceilings set a maximum price that suppliers are allowed to charge for a particular good or service. If demanders are unable to pay a higher price to signal their need for the good or service, suppliers may not be able to accurately determine the level of demand and may produce less of the good or service than is actually needed. This can result in shortages or inefficient allocation of resources.

If Price Ceilings Do Not Allow Prices to Rise, Then