What do economists mean by a price ceiling?

Answer:
A price ceiling is maximum price set below the equilibrium price. Prices that are set higher than the ceiling are made illegal by a government. We have experienced rent controls in such Canadian cities as Toronto and Vancouver. What happens in such a situation is that the price for a rental unit, such as an apartment, is held to a price of, say, $450 a month, when the equilibrium price would normally be $600. A shortage of suitable units will develop. Apartment developers respond to the challenge by supplying fewer apartments to the market. Some development firms respond by withdrawing their apartment units from the market and seeking another use for a building. Property owners usually respond to the government by spending less money on maintenance. The result of the policy, in short, is that both the quantity and the quality of rental units available in the city, declines.