price ceilings

A price ceiling is a government-imposed limit on how high a price can be charged for a product or service. It is set below the market’s natural equilibrium price to make essential goods more affordable for consumers. For example, rent controls cap rental prices to prevent excessive costs. While price ceilings can help consumers, they can also lead to shortages if suppliers find the capped price too low to cover costs, reducing the availability of the product or service in the long run.