how to do the following question:

what are the disadvantages and advantages of price ceilling? 

Dear Student,

Price celling is upper limit which is imposed by the government. Price celling is generally imposed on the items like wheat, kerosean, oil,etc. It is the below the market determined price since at the market determined price some section some section of society will not able to afford these goods. In other words it is the price fixed below the equlibriumprice. 

Advantages of Price Celling:
1.A price ceiling will keep prices under market value so that it will be affordable to consumers.
2. Price ceilings also prevent suppliers from price gouging and raising prices to incredible amounts just because they can.
3. Ceilings can also aid in easing the burdens of inflation.

Disadvantages of Price Celling:
1. As prices stay lower than market value, supply of products will diminish as more consumers can afford to buy them.
2. It takes away any incentive for suppliers to work to keep up supply because they aren't seeing the returns they'd otherwise receive.
3.This could also play out negatively as suppliers won't reinvest in their products or business since they won't be earning as much with a ceiling in place.


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