A price ceiling is a government-imposed limit on how high the price of a product can go. The limit is designed to ensure the affordability of essential goods. An example is the imposition of rent control, where high rental prices have made housing unaffordable for many residents. By capping rent prices, the government aims to make housing more accessible.

When the rent ceiling is enforced below the equilibrium price, demand for apartments increases because more people can now afford to rent. However, landlords and builders face reduced incentives to supply new housing or maintain existing units, as the rent ceiling restricts their potential profits. This results in a reduction in producer surplus, reflecting lost profits and decreased motivation for housing providers to continue investing in the market. At the same time, consumer surplus increases for those tenants who manage to secure housing at the reduced rent.

A significant drawback of rent ceilings is the emergence of deadweight loss, which reflects the inefficiencies caused by unmet demand and restricted supply. Some potential tenants are left searching for apartments that are no longer available, and new housing projects may be abandoned due to reduced profitability.

While rent ceilings can promote social equity by temporarily making housing more affordable, they often lead to shortages, lower-quality housing, and lost economic opportunities.