Price Ceiling

A price ceiling is a government-imposed limit on the price charged for a product. Governments intend price ceilings to protect consumers from conditions that could make necessary commodities unattainable. However, a price ceiling can cause problems if imposed for a long period without controlled rationing. Price ceilings can produce negative results when the correct solution would have been to increase supply. Misuse occurs when a government misdiagnoses a price as too high when the real problem is that the supply is too low. In an unregulated market economy price ceilings do not exist. Students may incorrectly perceive a price ceiling as being on top of a supply and demand curve when in fact, an effective price ceiling is positioned below the equilibrium position on the graph.

Other articles related to "price ceiling, price ceilings, price":

Price Ceiling - Real World Examples - Venezuela
10, 2006, BBC article reported that since 2003, Venezuela President Hugo Chavez has been setting price ceilings on food, and that these price ceilings have caused shortages and hoarding ... force them to produce at full capacity, which he alleged they had been avoiding in response to the price caps. 3, 2007 article in the International Herald Tribune reported that Chavez's price ceilings were causing shortages of materials used in the construction industry ...
Organ Trade - Scholarly Debate - Academic Perspectives - Economic Perspective
... This illegal status of organ trade creates a price ceiling for organs at zero dollars ... This price ceiling affects supply and demand, creating a shortage of organs in the face of a growing demand ... report published by the Cato Institute, a US-based libertarian think tank, the elimination of the price ceiling would eliminate the shortage ...

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