What Is The Effect On The Demand If Government Introduces Price Ceiling?


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amber Jhon answered
Price ceiling is the upper price limit of the goods and the services. If the government introduces price ceiling on the commodity then the demand of the product will increase. Price ceiling can increase the quantity demanded, even higher than the quantity supplied in the market.

This creates shortage of the product in the market because Qd > Qs. As government is responsible to look after the interest of both the consumers and the buyers therefore, government has to think over it before putting price ceiling. For the better understanding of the concept of price ceiling and its impact on the demand, please view the graphical description.

Price ceiling

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