Define a Price Ceiling and Explain How It Affects Resource

question 30

Essay

Define a price ceiling and explain how it affects resource allocation in a market. Give a real-world example of a price ceiling.
A price ceiling is an upper limit imposed on the price of a good. It holds the price below the equilibrium price, and the result is that the quantity demanded is greater than the quantity supplied. This causes a shortage. Rent control in New York City and other places is an example of a price ceiling.

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Definitions:

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