Which of the following best defines a price ceiling?

The best definition of a price ceiling is that it is a set maximum price for a good. A price ceiling establishes a legal limit on how high the price of a product can be charged in the market. This is typically implemented to make essential goods more affordable for consumers, especially in cases where prices might otherwise rise significantly above levels that some consumers could afford.

For instance, in the housing market, a government might impose a price ceiling on rents to ensure that low-income families can afford housing. By keeping prices below the equilibrium level, price ceilings can lead to increased demand while potentially causing shortages, as producers may not find it profitable to supply sufficient quantities at that lower price.

In contrast, a minimum allowable price refers to a price floor, which is used to prevent prices from falling below a certain level. A price set above equilibrium is not relevant to the concept of a price ceiling, and a voluntary market price indicates that prices are determined by the forces of supply and demand without external intervention.