Which one of the following is an example of a price ceiling?

Which one of the following is an example of a price ceiling?

Fares charged by Airlines in India
Price printed on biscuit packets
Minimum support price for cane growers
Minimum wages fixed by state Governments
This question was previously asked in
UPSC CAPF – 2019
The correct answer is B) Price printed on biscuit packets.
A price ceiling is a government-imposed limit on how high a price can be charged for a product or service. It must be set below the market equilibrium price to be effective.

* Option A) Fares charged by Airlines in India: Airline fares are generally determined by market dynamics, although they can be subject to regulatory oversight regarding maximum and minimum limits or fare bands in certain situations (like during emergencies or for specific routes). However, they are not a standard, universal example of a price ceiling like an MRP.
* Option B) Price printed on biscuit packets: This typically refers to the Maximum Retail Price (MRP). MRP is a type of price ceiling set by the manufacturer, indicating the maximum price that can be charged to the consumer. It serves as a legal upper limit.
* Option C) Minimum support price for cane growers: Minimum Support Price (MSP) is an example of a price floor, which is a minimum price set by the government, usually above the equilibrium price, to protect producers (farmers in this case).
* Option D) Minimum wages fixed by state Governments: Minimum wage is another example of a price floor, applied to the price of labour.

Therefore, the price printed on biscuit packets (MRP) is the clearest example of a price ceiling among the given options.

Price ceilings are typically implemented to protect consumers from excessively high prices for essential goods or services. However, if set too low, they can lead to shortages as supply decreases and demand increases at the controlled price. Price floors, conversely, are often used to support producers or workers, but can lead to surpluses (e.g., agricultural surpluses or unemployment).
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