Explain the effect of 'Maximum Price Celling' on the market of a good. Use diagram

Explanation

Maximum Price Ceiling refers to imposition of upper limit on the price of a good by the government. For example, in the diagram, OP is Price Ceiling, while equilibrium price is `OP_(1)`. At this price, the producers are willing to supply only `PA (Or OQ_(1))`, while consumers demand `PB (Or OQ_(2))`. The effect of the ceiling is that shortage, equal to `AB (Q_(1)O_(2))`, is created, which may further lead to black marketing.