Effect of Price Ceilings Imposition on Consumer Products

Price ceiling is defined as the state imposed restriction regarding the pricing of a product beyond a particular limit. The major reasons why many governments will attempt to predetermine the prices of a product below a particular limit is that they endeavor to guard customers from abuse by traders. Nevertheless, the impacts of prices manipulation may injure the economy if done for long periods with no adjustments.

The impact of a bigger market price as compared to the price ceiling is a shortage formation in the market. Thus, this signifies that quantity demanded is below quantity supplied in that particular market. Suppliers will see their profits are reducing compared to restricted leading their exit in the market. Customers will also raise their demand as a result of product price reduction (WhatisEconomics 2).

Additionally, price ceilings introduces products and services sales discrimination .Sellers result to offering the services and products to the utmost binders within the black market. An additional effect is that suppliers will tend to offer low quality products and services to continue making the previous profit margins. The manufacturers can choose to reduce the production quantity, or decrease the ingredients’ quality in production. The only exemption concerns the oligopoly market where opposing companies may raise the product quality without raising their prices (Montreal Economic Institute 3).

Price ceiling may persuade black markets to flourish in the market. Scarcity in the free market propels consumers to search for products in the black market although they may be exceedingly priced. The consequence of black market thriving leads to governments losing in revenues previously received through taxation. Products traded within the black market are usually unregistered therefore; no records are accessible for tax collection.

Works Cited

Montreal Economic Institute. “THE PERNICIOUS EFFECTS OF PRICE CONTROLS.” IEDM. N.p., 2006. Web. 28 Aug. 2014. <http://www.iedm.org/files/avr06_en.pdf>.

WhatisEconomics. “How price ceiling affects market outcomes.” What is Economics?. N.p., 2014. Web. 28 Aug. 2014. <http://www.whatiseconomics.org/macroeconomics/how-price-ceiling-affects-market-outcomes>.

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more