In a competitive market, when the market demand is qd = 400 - 5p and the market supply is qs = 10p - 80, a price ceiling of $32 will result in neither a shortage nor a surplus.
A price ceiling is the established upper limit on what a seller is entitled to charge for a product or service. When essentials like food and electricity become unaffordable for the average consumer, price caps are frequently enforced. Usually, price caps are established by law.
A price cap is essentially a type of pricing control. Price limitations can be helpful in temporarily lowering the cost of needs. The long-term benefit of such ceilings is a matter of contention among economists.
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