Price Ceiling: Meaning, Demand and Supply Diagram, Efficiency and Equity Arguments, Mousa's Theory

Price Ceiling

Table of Contents
INTRODUCTION...........................................................................................................................................3
MEANING OF PRICE CEILING.......................................................................................................................3
Price ceiling in Rental Market......................................................................................................................3
DEMAND AND SUPPLY DIAGRAM................................................................................................................4
Set efficiency and Equity arguments surrounding rend set controls for price ceiling..................................5
MOUSA’S THEORY.......................................................................................................................................7
CONCLUSION...............................................................................................................................................8
References...................................................................................................................................................9
Appendix...................................................................................................................................................10

INTRODUCTION
With the changes in economic, it is considered that rent control is designed by undertaking the
maximum price or Rent Ceiling charged by the landlord for their land. It roots belongs to the
years after World War I. This business essay will introduce the topic of rent control and price
ceiling to the reader. This essay is divided into three parts: First, the topic will be introduced.
Secondly, price ceiling and rent control will be analyzed by demand and supply diagrams.
Thirdly, efficiency and equity arguments about the topic will be discussed. Fourthly, Mousa’s
comment on rental property in Australia. Finally we will be presenting conclusions of this essay.
MEANING OF PRICE CEILING
It is analyzed that Price Ceiling in economy emerged when the government of the economy bears
the current equilibrium price and adjust the price accordingly.
It is analyzed that maximum price or price ceiling is basically arises when government believes
that the price is too high and crossing the set limits. It is used to set equilibrium between the cost
and price charged.
Price ceiling in Rental Market
The government can set the limit on how much a landlord should charge rent on the tenant for
his rent and the maximum limit of money which they could ask from the tenant.
. Control on rent increases the quality and reasonability of housing in the rental markets of
Australia.
In the long-run the demand for apartments is decreased because of price control. As suppliers are
not ready to spend their money in building of new apartments, because they are unable to charge
a profitable rent. Landlords neither develop new apartments nor do they maintain the existing
ones. Reason behind this is, that they not only just want to save their costs but also they do not
worry about the demand prevailing in the market because their excessive demand for rent-
controlled apartments.