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Question
What is price ceiling?
Short Answer
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Solution
Price ceiling is the maximum legal price which the suppliers can charge for a particular good or service. Price ceiling makes it illegal for the sellers to charge more than the stipulated price. Often, the government sets the maximum price in order to freeze the price of a specific commodity. This most permitted price is known as the ‘price ceiling’.
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Chapter 6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market - TEST YOURSELF QUESTIONS [Page 114]
