Ktoyou's Blog : TERM OF THE DAY: Price Ceiling

Compliments of Investopedia: NOTE...I WOULD HIGHLY ENCOURAGE THOSE WHO RENT, ARE RENTERS, OR LOW INCOME TO READ THIS.

Price CeilingWhat Does Price Ceiling Mean?

A maximum price a seller is allowed to charge for a product or service. Price ceilings are usually set by law and limit the seller pricing system to ensure fair and reasonable business practices. Price ceilings are usually set for essential expenses; for example, some areas have "rent ceilings" to protect renters from climbing rent prices. I

nvestopedia explains Price Ceiling..........
Price ceilings are regulations designed to protect low income individuals from not being able to afford important resources. Many economists question their effectiveness. Price ceilings will have no effect if the equilibrium price is below the ceiling. If the ceiling is set below the equilibrium level, however, then there is a deadweight loss created. Other problems come in the form of black markets, search time, and fees which are added but not directly associated with the sale - for example a high charge for fittings could be added to a maxed out rental cost.