Question

Does a price ceiling change the equilibrium price?

Short answer

1

Step-by-step solution

Step 1. Define price ceiling.

A price ceiling is the most a producer can charge for a product or service. This is frequently required by the government to ensure that consumers can afford the goods and services in demand.

Step 2. Is it true that a price ceiling affects the equilibrium price?

A pricing ceiling is nothing more than a legal limit. The term "equilibrium" refers to the state of affairs in the economy. People may or may not follow the price ceiling, thus the actual price may be at or above it, but the price ceiling has no effect on the equilibrium price.