Price ceiling

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Price Ceiling.gif

A price ceiling, also known as a price control, is a government regulation prohibiting the sale of a good or service above a fixed price. Rent control on older dwellings in large cities, such as New York City, is an example of a price ceiling. Price controls during World War II are also examples of price ceilings. To be effective, the price ceiling has to be below the equilibrium, as shown in the picture on the right. Price ceilings have no effect on the price if it is above the equilibrium.