On which types of goods do governments most commonly impose price ceilings?

• A. Goods with negative externalities such as cigarettes
• B. Essential goods such as food and housing
• C. Luxury goods such as designer clothing
• D. Goods with inelastic supply such as rare art

Answer: (B)

Verified step by step guidance

1. Understand the concept of a price ceiling: it is a government-imposed maximum price that can be charged for a good or service, usually set below the market equilibrium price to make the good more affordable.
2. Recall the typical reasons governments impose price ceilings: to protect consumers from excessively high prices, especially for goods considered essential for daily living.
3. Analyze the options given: goods with negative externalities (like cigarettes) are often taxed or regulated, not price-ceilinged; luxury goods usually do not have price ceilings because they are not essential; goods with inelastic supply (like rare art) are not typically price-controlled.
4. Recognize that essential goods such as food and housing are the most common targets for price ceilings because these goods are necessary for basic living and affordability is a public concern.
5. Conclude that governments most commonly impose price ceilings on essential goods to ensure accessibility and prevent prices from becoming prohibitively high.