PRICE CEILING Meaning and
Definition
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A price ceiling refers to a government-imposed maximum limit on the price at which a particular good or service can be sold in the market. This form of regulation is designed to protect consumers and ensure affordability of essential products or services. The price ceiling is set below the equilibrium market price, establishing a maximum threshold that suppliers are permitted to charge.
The aim of implementing a price ceiling is primarily to prevent monopolistic or oligopolistic behavior and excessive profiteering, particularly when supply and demand dynamics are imbalanced. By capping the prices, policymakers often intend to make certain goods or services more accessible and affordable, especially for low-income individuals or vulnerable populations.
Though price ceilings strive to benefit consumers, they can have unintended consequences. A significant outcome is the potential for shortages, as the artificially reduced price may result in suppliers being unwilling or unable to produce or distribute the product at a loss. Consequently, consumers may face difficulties in acquiring the desired goods or services due to the mismatch between demand and supply.
Moreover, when price ceilings are imposed, sellers may resort to alternative methods of cost recovery, limiting their profit potential. This can lead to reduced quality or a diminishing supply of the product, as suppliers may allocate resources elsewhere where they can obtain higher returns. Additionally, black markets can emerge as a consequence of price ceilings, where goods are sold illegally at prices higher than the regulated limit.
Common Misspellings for PRICE CEILING
- orice ceiling
- lrice ceiling
- -rice ceiling
- 0rice ceiling
- peice ceiling
- pdice ceiling
- pfice ceiling
- ptice ceiling
- p5ice ceiling
- p4ice ceiling
- pruce ceiling
- prjce ceiling
- prkce ceiling
- proce ceiling
- pr9ce ceiling
- pr8ce ceiling
- prixe ceiling
- prive ceiling
- prife ceiling
- pride ceiling
Etymology of PRICE CEILING
The word "price" originated from the Old French word "pris" meaning "value" or "worth". It further evolved from the Latin word "pretium" with the same meaning. The term "ceiling" stems from the Middle English word "selyng", which refers to the overhead surface of a room. The word "ceiling" has been used metaphorically to describe a maximum limit or boundary since the mid-16th century. Therefore, the etymology of the term "price ceiling" combines "price" with "ceiling" to describe a maximum or upper limit imposed on the price of a product or service.
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