Which of the following statement/statements are true?
Statement 1: One of the consequences of price ceiling is black marketing of the commodity.
Statement 2: Price ceiling is a price set below equilibrium level at which there is less supply and more demand, thereby leading to shortage of commodity in the market.

Both the statements are true.

The correct answer is Option 1: Both the statements are true.

Statement 1: True

• Price ceiling is a government-imposed maximum price on essential goods, set below the equilibrium price to make the product affordable.
• Since the market price is forced to stay low, demand increases while supply decreases, leading to a shortage.
• This shortage creates an opportunity for black marketing, where sellers illegally sell the commodity at a higher price due to high demand.

Statement 2: True

• A price ceiling is always set below the equilibrium price, causing a market imbalance.
• At this artificially lower price:
  • Quantity demanded exceeds quantity supplied, creating a shortage.
  • Consumers want more of the product, but producers are not willing to supply enough due to lower profits.