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Market Equilibrium — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMarket Equilibrium4 Marks
Question
Explain the meaning and implications of maximum price ceiling and minimum price ceiling.
✓

Answer

When the government imposes upper limit on the price of a good it is called maximum price ceiling. It is fixed below the equilibrium price.
Implication (maximum price ceiling): It will lead to excess demand. This in turn may lead to black marketing of goods. When the government imposes lower limit on the price of a good, it is called minimum price ceiling.
Implication (minimum price ceiling): It leads to excess supply.This in turn may lead to illegal selling below the ceiling price as the producers are not able to sell what they desire to sell.

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