A basic demand curve. For more information, see Basic Supply and Demand
A basic supply curve. For more information, see Basic Supply and Demand
A price ceiling is the maximum legal price that a seller may charge for a product or service as implemented by the government.
The price ceiling forces the price below the equilibrium price and causes the quantity supplied (QS) to be less than the quantity demanded (QD). This leads to a shortage of the product, as the producers are not willing to provide as much product as consumers would like at such a low price.