Maximum price (price ceiling)
A price set by the government below the equilibrium price. It is supposed to favour the consumers. It is illegal to sell the commodity at a price higher than the maximum price.
The price determined by the forces of demand and supply is OP1. The maximum price is OP2 which results into a shortage of C2Q3. There are a number of consequences for a maximum price. These include; black markets; excessive profits earned by sellers; hoarding; corruption; bribes; long queues; favouritism; expensive to carry out; the consumer is forced to buy a commodity which he does not require. [For instance, if it is sugar for which a maximum price has been set, the seller may force you to buy tea-leaves). In order to enforce the maximum price, supply should be increased from $1 to S2.