Question

Price Ceiling refers to-

• A. The upper limit on the price of a good or service imposed by the government
• B. The price of the sequence fit length of ceiling in a building.
• C. The price fixed by a government on oil and agricultural produce
• D. Price limit by Industry

Hint:

Contrast 'Price Ceiling' with 'Price Floor'. A \textbf{ceiling} is a \textbf{maximum} price (like the ceiling of a room is the highest point) set to protect consumers. A \textbf{floor} is a \textbf{minimum} price (like the floor of a room is the lowest point) set to protect producers (e.g., Minimum Support Price for crops).

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
A price ceiling is a type of price control, typically mandated by the government, that sets a maximum price a seller is allowed to charge for a product or service.

Step 2: Detailed Explanation:
The term "ceiling" itself suggests an upper boundary. A price ceiling is the highest possible price, or an upper limit, that can be legally charged. The primary purpose of a price ceiling is to make essential goods and services (like rent, food, or medicine) affordable for consumers, especially during times of shortage or high inflation.

Step 3: Analyzing the Options:


(A) The upper limit on the price of a good or service imposed by the government: This is the precise and general definition of a price ceiling.
(B) The price of the sequence fit length of ceiling in a building: This is a literal and incorrect interpretation of the term.
(C) The price fixed by a government on oil and agricultural produce: This is an {example} of a price ceiling, but it is not the {definition}. The definition is broader.
(D) Price limit by Industry: Price ceilings are a form of government regulation, not typically set by the industry itself (which would be closer to price-fixing, an anti-competitive practice).

Step 4: Final Answer:
The best definition of a price ceiling is the upper limit on the price of a good or service imposed by the government.