Price ceiling and floors are economic tools used by the government to regulate certain products and or services. When a price ceiling is imposed, it restricts a product from exceeding a certain price. For example ice cream cones currently sell for $1.50 a cone, with a price ceiling of $3.00. Suppose it is the hottest summer ever, which drives the demand and price for ice cream sky high. When the price reaches $3.00, all upward moving in prices will seize.
2006-09-04 15:17:13
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answer #1
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answered by B. T 2
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Price ceiling is the highest possible price of a commodity fixed by a pricing authority such as the government. Such highest prices are set in the interest of consumers such that producers cannot further increase its price. This ceiling covers the normal profit of the producers. If producers are set free to fix any price above this ceiling, they will earn super normal profits at the cost of consumers' interest.
2006-09-04 07:52:03
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answer #2
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answered by cgen2 2
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An upper limit is put on the price that can be charged for a good or service. When demand exceeds supply at this price then some form of rationing must be used to allocate it.
2006-09-04 06:44:26
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answer #3
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answered by Shadow 1
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The ceiling is the highest level at which people are prepaered or able to pay for particular goods pr services.
2006-09-04 09:27:23
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answer #4
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answered by malcy 6
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good question
2006-09-04 08:51:05
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answer #5
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answered by 3mi 2
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huh?
2006-09-04 14:03:33
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answer #6
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answered by ✠TotalTechMasta✠ 4
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