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?
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.