Final answer:
A price ceiling is a binding price control that prevents the price of a good or service from rising above a certain level set by the government, while a non-binding price control does not have any impact on the market price.
Step-by-step explanation:
A price ceiling is a type of price control that prevents the price of a good or service from rising above a certain level set by the government. It is a binding price control because it creates a legally mandated maximum price.
On the other hand, a non-binding price control does not have any impact on the market price because it is set above the equilibrium level.
For example, let's say the government imposes a price ceiling on rent, restricting it to $1000 per month. If the equilibrium rent is already $800, the price ceiling is non-binding and will not affect the market price. However, if the equilibrium rent is $1200, the price ceiling becomes binding and sets a maximum price below the equilibrium, potentially causing shortages and a distorted market.