Short note on price ceiling
 

Dear student,

Price ceiling is a maximum price fixed by Government that a seller can charge from the consumers. Price ceiling is fixed below the equilibrium level to ensure that the essential commodities are affordable to general public. It enables poor people to afford essential commodities at a reasonable price. It creates a problem of shortage as it leads to a situation of excess demand. The situation of excess demand creates a problem of Black Marketing which worsen the situation of poor sections of the society as in situation of black marketing, the goods are sold at a price higher than that fixed by the government. 
So, the government should ensure efficiency of ration shops and other channels of distribution along with fixing price ceiling to ensure welfare of poor sections of society.



Regards

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Price ceiling refers to the maximum price that the producers are allowed to charge from the consumers. It is mainly imposed when the essential commodities go beyond the reach of common man. It is to protect the interests of the consumers. It leads to excess demand , as a result consumers will not be able to buy what all they want. Producers start selling goods illegally at a higher price thereby leading to black marketing. Therefore the implication of this is that it leads to black marketing which makes the consumers to pressurise government to sell these goods through public distribution system.
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