Final answer:
A price ceiling is a legal maximum price that is imposed by the government to keep the price of a necessary good or service affordable. Examples include rent control laws in certain cities and limits on interest rates charged by credit card companies.
Step-by-step explanation:
A price ceiling is a legal maximum price that one pays for some good or service. It is imposed by the government to keep the price of a necessary good or service affordable. For example, during Hurricane Katrina in 2005, the price of bottled water increased above $5 per gallon, prompting calls for price controls on bottled water. While the government did not impose a price ceiling in that specific case, there have been other instances where price ceilings have been implemented.
One example of a price ceiling is rent control laws in certain cities like New York, Washington D.C., and San Francisco. These laws limit the maximum percentage by which landlords can raise rents each year, with the aim of keeping housing costs affordable for renters.
Another example of a price ceiling is usury laws that limit the interest rates or fees charged by credit card companies. Some political pressures arise to set limits on these rates and fees to protect consumers from high costs.A