What is minimum price ceiling? Explain its implications. - Vidyadip

Question

What is minimum price ceiling? Explain its implications.

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Answer

For certain goods & services, govt. sets minimum price. This minimum price is called minimum price ceiling.
This price is normally set at a level higher than the equilibrium price. This leads to excess supply. Since producers are not able to sell all they want to sell, they illegally sell the good or service below the minimum price.

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