Price Ceilings and Price Floors Price ceiling: Price ($/unit) The price cannot exceed the ceiling S . . . . . . price. 80 To be effective, the price ceiling must be set below the equilibrium price. 60 An effective price ceiling causes Excess Demand or a shortage. 40 For example, if the government sets a Price ceiling = $30, then 20 . . Quantity demanded = units and D Quantity supplied = _ units, 0 20 40 60 80 90 causing a shortage of units. Widgets (units)