Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 3: Q.27 (page 78)

Does a price ceiling attempt to make a price higher

or lower?

Short Answer

Expert verified

Price ceiling attempts to make a price lower.

Step by step solution

01

Step 1. Concept of price ceiling.

A price ceiling is a type of price limit in which the government fixes and upper limit is when the government establishes an uppper limit on the price for a given commodity or service. This is done to make sure that corporations do not overcharge customers and can maintain a reasonable price for their items.

02

Explanation of price ceiling.

A price ceiling is an attempt by the government to keep prices low. It is mostly used to control rents. This ensures that landlords can only raise rents by a specified amount each year. Price ceilings keep prices at a fixed level, but if demand rises beyond that level, there will be a scarcity.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Why do economists use the ceteris paribus assumption?

A low-income country decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at \(2.40? At \)2.00? At $3.60?

Suppose both of these events took place at the same time. Combine your analyses of the impacts of the iPod and the tariff reduction to determine the likely impact on the equilibrium price and quantity of Sony Walkman-type products. Show your answer graphically.

How can you locate the equilibrium point on a demand and supply graph?

We know that a change in the price of a product causes a movement along the demand curve. Suppose consumers believe that prices will be rising in the future. How will that affect demand for the product in the present? Can you show this graphically?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free