Can you think of any commodity on which price ceiling is imposed in India? What may be the consequence of price-ceiling?

Price ceiling means deciding the lower prices as compared to the market price of goods. In India there are several goods on which government has imposed price ceiling so as to keep them available within the reach of the people below poverty line such as kerosene oil, sugar, wheat, rice, etc.

The consequences of price ceiling as stated below –

a) Excess demand - Due to artificially imposed prices, which is lower than the equilibrium price will lead to excess demand

b) Fixed quota - The consumer gets a fixed quantity of goods which is often less than their individual requirement due to which the consumer remains unsatisfied.

c) Inferior goods - Often it has been found that the goods that are rationed are inferior in quality and adulterated.

d) Black marketing - The needs of a consumer remains unfulfilled due to quota fixed by government and such consumers are ready to pay higher prices for additional quantity which leads to black marketing and artificial shortage in market.