Price Ceiling

Nowadays gasoline price getting higher and higher, many people drive to work, school and other usage. Unfortunately the income of consumers does not increase, it has become a burden to them. So people decided change to use public transport because they can afford the cost of using public transport than driving own car. The economics of the country will be affect by this issue because people lack of income so they have no the ability to purchase. Thus, the economics does not growth instead fall frequently. In this situation price ceiling occurs. Price ceiling is a regulation that makes it illegal to charge a price higher than a specified level. Government puts a legal limit on the higher price of a product. This implementation of price ceiling helps to protect those individuals who lack of ability to purchase the things at a higher price.
Price ceiling must set below the equilibrium price, otherwise price ceiling set above the equilibrium has no effect. Set the price ceiling below the equilibrium, it has powerful effect. When price ceiling is set, shortage occurs. At equilibrium price show the demand has being excess and there is also less supply. It means there is more quantity demanded than quantity supplied. This inefficiency is equal to the deadweight welfare loss. Although it is deadweight welfare loss but it helps a lot of poor individual to purchase what they needed.