<p>No there is no impact at all. A price ceiling of <code>$10</code> means that the price cannot go above <code>$10</code>. Since the equilibrium price is already below <code>$10</code> the creation of a price ceiling will not effect anything at all. </p>

<p>It is called an ineffective ceiling because it is precisely that, ineffective.</p>

CC BY-SA 3.0
2017-04-27T07:16:45.850Z
saint321: but as you can see in the graph that there is a surplus of suppliers over buyers. $10 price leads to higher supply and lower demand.so how you can call this ineffective or no effect of ceiling on the market?
MUHAMMAD Siyab
CC BY-SA 3.0
2017-04-27T17:31:57.873Z
@MohammadSiyab There is a surplus of suppliers over buyers if the price is above Pe. But the price won't be above Pe becayse Pe is the equilibrium price.
Ubiquitous
CC BY-SA 3.0
2017-04-28T04:06:29.583Z
my graph is correct?
MUHAMMAD Siyab
CC BY-SA 3.0
2017-04-28T13:24:59.090Z
No. I didn't really look at the graph the first time. The supply curve should be upward sloping and the demand curve should be downward sloping. You have them reversed. Furthermore, if you want to show what the quantity supplied would be at the price ceiling then you need to show the supply curve intersecting with the price which you don't. As it is the quantity supplied seems arbitrary. Here is a better example of an ineffective price celining graph: https://image.slidesharecdn.com/lec1-5fordesktop-090713040352-phpapp02/95/supply-demand-government-policies-6-728.jpg?cb=1247457854
TheSaint321
CC BY-SA 3.0
2017-04-28T13:27:59.577Z
Unless this is the graph you were provided in which case this is a very strange economy indeed where suppliers supply more of their products for lower prices and consumers buy more product for higher prices. This violates the fundamental assumptions of economics.
TheSaint321
CC BY-SA 3.0
2017-04-26T17:39:50.387Z
2017-04-26T17:39:50.387Z
TheSaint321
<p>No impact at all. Hence the term "non-binding". </p>

CC BY-SA 3.0
2017-04-26T07:26:41.017Z
2017-04-26T07:26:41.017Z
sofia
<p>If the Price of a commodity is <strong>1 dollar</strong> and this price is the equilibrium price. At this price, the quantity demanded &amp; supplied is 100(KGs). If government sets the price ceiling of <strong>10 dollars</strong>, What would be the effects on the market?</p>

<p>My <strong>curve</strong> for this question is:
<a href="https://i.sstatic.net/Zrxat.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/Zrxat.png" alt="enter image description here"></a></p>

CC BY-SA 3.0
2017-04-26T06:01:54.280Z
So now that you have drawn a nice graph, all you have to do is interpret it. Where do you encounter difficulty?
Giskard
CC BY-SA 3.0
2017-04-26T09:30:50.213Z
@denesp: As we know that when the price ceiling is set above the equilibrium, it is ineffective but the graph i've drawn shows the surplus of suppliers over buyers. So how can we call this ineffective ceiling.. in the graph, the ceiling above the equilibrium effects the market.
MUHAMMAD Siyab
<microeconomics><price-level>
Does non-binding price ceiling effect the market?
MUHAMMAD Siyab
# Does non-binding price ceiling effect the market?

(Asked by: username_0 on 2017-04-26)

If the Price of a commodity is **1 dollar** and this price is the equilibrium price. At this price, the quantity demanded & supplied is 100(KGs). If government sets the price ceiling of **10 dollars**, What would be the effects on the market?

My **curve** for this question is:
[![enter image description here](https://i.sstatic.net/Zrxat.png)](https://i.sstatic.net/Zrxat.png)

**Tags:** microeconomics, price-level

> **Comments:**
> **username_1**: So now that you have drawn a nice graph, all you have to do is interpret it. Where do you encounter difficulty?  
> **username_0**: @denesp: As we know that when the price ceiling is set above the equilibrium, it is ineffective but the graph i've drawn shows the surplus of suppliers over buyers. So how can we call this ineffective ceiling.. in the graph, the ceiling above the equilibrium effects the market.  

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## 2 answers

### Answer by username_2 on 2017-04-26. Score: 1

No there is no impact at all. A price ceiling of `$10` means that the price cannot go above `$10`. Since the equilibrium price is already below `$10` the creation of a price ceiling will not effect anything at all.

It is called an ineffective ceiling because it is precisely that, ineffective.

> **Comments:**
> **username_0**: saint321: but as you can see in the graph that there is a surplus of suppliers over buyers. $10 price leads to higher supply and lower demand.so how you can call this ineffective or no effect of ceiling on the market?  
> **username_3**: @MohammadSiyab There is a surplus of suppliers over buyers if the price is above Pe. But the price won't be above Pe becayse Pe is the equilibrium price.  
> **username_0**: my graph is correct?  
> **username_2**: No. I didn't really look at the graph the first time. The supply curve should be upward sloping and the demand curve should be downward sloping. You have them reversed. Furthermore, if you want to show what the quantity supplied would be at the price ceiling then you need to show the supply curve intersecting with the price which you don't. As it is the quantity supplied seems arbitrary. Here is a better example of an ineffective price celining graph: https://image.slidesharecdn.com/lec1-5fordesktop-090713040352-phpapp02/95/supply-demand-government-policies-6-728.jpg?cb=1247457854  
> **username_2**: Unless this is the graph you were provided in which case this is a very strange economy indeed where suppliers supply more of their products for lower prices and consumers buy more product for higher prices. This violates the fundamental assumptions of economics.  

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### Answer by username_4 on 2017-04-26. Score: -1

No impact at all. Hence the term "non-binding".


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