Economics Supply And Demand Questions
Price ceilings have a negative impact on the market as they create a shortage of goods or services. When the government sets a maximum price below the equilibrium price, it leads to excess demand, causing suppliers to be unable or unwilling to produce and sell the goods or services at that price. This results in a shortage, where the quantity demanded exceeds the quantity supplied. Additionally, price ceilings can lead to a decrease in quality, black markets, and a misallocation of resources.