Price Ceiling
An artificial price limitation that specifies that no seller can sell this good or service above a certain dollar amount. This is typically put in place as a consumer protection. Price ceilings usually forces the price of the good or service to be below the equilibrium price, and so often results in shortages. An example of a price control would be a city specifying the maximum rent for certain apartments be much lower than the “market rate” – the demand for these cheap apartments is usually much greater than the available apartments to rent.
Related Lessons
