Read the following statements carefully.
Statement I: Price ceiling is the maximum price of a product, set at a level above the equilibrium price.
Statement II: Government uses price ceiling to set the prices of non-essential commodities.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Both the statements are false.
A price ceiling is the highest price the government allows. It is used to keep necessary goods within the reach of poorer people.
Statement I: Price ceiling is the maximum price of a product, set at a level above the equilibrium price. — False. A ceiling above the equilibrium price would not lower the price at all. It is fixed below the market-determined price.
Statement II: Government uses price ceiling to set the prices of non-essential commodities. — False. Ceilings are put on necessary items like wheat, rice, kerosene and sugar.
NCERT (2026-27): “5.2.1 Price Ceiling It is not very uncommon to come across instances where government fixes a maximum allowable price for certain goods. The government-imposed upper limit on the price of a good or service is called price ceiling. Price ceiling is generally imposed on necessary items like wheat, rice, kerosene, sugar and it is fixed below the market-determined price since at the market-determined price some section of the population will not be able to afford these goods.” |