ACKNOWLEDGEMENT

Thank God, gratitude to the divine wish for giving us health, patience and strength for us to
complete this report given to us within the prescribed time. We would also like to thank our
parents who have been giving us financial support and encouragement needed despite being far
away from us. They are also our main pillars that give us the motivation needed to complete this
assignment.

Next,we would like to show our gratitude to our lecturer Madam Hanani binti Ahmad Fuad for
guiding towards the completion of this report and for helping us to make this report more
organized and perfect.  

Last but not least, we would like to thank our helpful friends for giving such wonderful ideas and
opinions and for this group’s members that were involved in completing this task successfully and
be able to run this report without any hassle.

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INTRODUCTION

Ceiling price can be defined as the maximum price allowed for a product or service. The ceiling
price is established by market conditions or government requirement. The ceiling price is set
below the price equilibrium in order to prevent the producers from raising the price of a product
or service above the price equilibrium.

Maximum price is implemented to protect consumers, usually during food shortages to ensure
that there are low cost foods for the poor. The government is usually the one setting the ceiling
price because the product is in an affordable accommodation for low income groups

Maximum price is set below the equilibrium price which means the producers or sellers cannot
sell goods or services higher than the maximum price.

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THE ARTICLES OF PRICE CEILING

PUTRAJAYA: The ceiling price for coarse granulated sugar and refined granulated sugar will be
reduced by 10 sen per kg effective Sept 1.
The new price of coarse granulated sugar is set at RM2.85 per kg, while fine granulated sugar is
set at RM2.95 per kg.
Minister of Domestic Trade and Consumer Affairs Datuk Saifuddin Nasution Ismail said this
was due to the global reduction in the price of raw sugar, as well as the rise in living costs.
“Due to the falling trend in the price of raw sugar globally, as well as the price of sugar in the
domestic market in neighbouring countries, the government has decided to reduce the ceiling
price of sugar.
“Hopefully, this reduction will spark a multiplying effect that would cause a reduction in the
price of food and drinks in the market,” said Saifuddin at a press conference after his ministry's
monthly assembly here on Monday (August 27).
The minister however stressed that the reduction in sugar prices should not be seen as an
encouragement by the government to increase one's sugar intake.
“We must remind the public that excessive sugar consumption will increase health risks such as
diabetes, obesity and heart problems. In 2016, over 3.6 million Malaysians aged 18 and above
were diabetic.” he said.

Read more at https://www.thestar.com.my/news/nation/2018/08/27/sugar-prices-to-reduce-

He said the Malaysian Aviation Commission (Mavcom) has been instructed to conduct a study on
the ceiling price for domestic flights. 
"The average flight ticket price from peninsular to Sabah and Sarawak is around RM160. 
"During the festive period, a study by Mavcom has found that the ticket price can increase by five
times," he said. "Mavcom is in the process of setting up ceiling prices for domestic flights, due for
completion by mid-2018," he told the Dewan Rakyat. 

He was responding to a question from Oscar Ling Chai Yew (DAP -Sibu) who asked about the
role of Mavcom in regulating the price of flight tickets. 
In posing his question, Ling asked about the measures undertaken by the government to ensure
ticket prices from the peninsular to east Malaysia does not increase during the festive seasons. 
"The government has failed to control the price. During such seasons, a flight from peninsular to
Sabah and Sarawak can reach RM1,000 one way," Ling said. 

Kaprawi advised the public to plan their schedule ahead and refrain from buying their tickets at
the last minute. He said the price of flights tickets were set by the aviation companies based on
several factors, including market demand, economic situation and operational cost.

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Prices on 18 items capped for Aidilfitri
Monday, 30 Jun 2014
SEREMBAN: The Domestic Trade, Cooperative and Consumerism Ministry has fixed the
ceiling price for 18 controlled items under the Aidilfitri Price Control Scheme 2014, which will
take effect from July 20 to Aug 5.
Its minister, Datuk Seri Hasan Malek, said the scheme would be implemented under the Price
Control and Anti-Profiteering Act 2011.
“Traders will be compelled to sell those controlled items below the ceiling price fixed by the
Government and to put a special pink-coloured price tag on those items to differentiate them
from other items.
“However, they are also encouraged to sell those controlled items at much lower prices if their
supplies came at relatively cheaper prices,” he said after visiting Seremban 2 Tesco Hypermarket
here yesterday.
The 18 controlled items are live chicken, standard chicken, super chicken, local beef, imported
beef (maximum price in Sarawak only), imported buffalo meat (India), chicken eggs – grade A,
B and C, red chillies, tomatoes, whole coconuts (ceiling price at wholesale level only), grated
coconut (ceiling price at retail level only), shallots (India), imported onions, garlic (China),
imported potatoes (China) and ikan kembung.
Hasan also said that stern action awaited traders who failed to adhere to the regulations under the
scheme. — Bernama

Read more at https://www.thestar.com.my/news/nation/2014/06/30/prices-on-18-items-capped-

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Govt to abolish cement ceiling price
Monday, 2 Jun 2008
KUALA LUMPUR: The Government is scraping the ceiling price for cement to boost the
country’s building industry and will come into effect on Thursday.
Prime Minister Datuk Seri Abdullah Ahmad Badawi said in a statement Monday that importers
would only need to pay 10% import duty in cement. Importers in Sabah and Sarawak would be
exempted from having to obtain import licences, he said.
He said the Government had received many complaints about the supply of cement due to the
fixed price for cement. He added the global cement prices had also risen above the government-
controlled price.
“This problem has caused negative impact on the construction industry and jeopardised the
country’s development projects,” he said.

Read more at https://www.thestar.com.my/business/business-news/2008/06/02/govt-to-abolish-

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EFFECT OF PRICE CEILING

The effects of price ceilings are complex and sometimes unexpected. In the case of rent control,
the price ceiling doesn't simply benefit renters at the expense of landlords. Some renters or
potential renters lose their housing as landlords convert apartments to co-ops and condos. There
are actually fewer apartments rented out under the price ceiling 15,000 rental units than would be
the case at the market rent of $600, 17,000 rental units. And, even when housing remains in the
rental market, landlords tend to spend less on maintenance and on essentials like heating,
cooling, hot water, and lighting.

The first rule of economics is do not get something for nothing, everything has an opportunity
cost. So if renters get “cheaper” housing than the market requires, they tend to end up with lower
quality housing.

Price ceilings are enacted in an attempt to keep prices low for those who demand the product be
it housing, prescription drugs, or auto insurance. But when the market price is not allowed to rise
to the equilibrium level, quantity demanded exceeds quantity supplied, and thus a shortage
occurs.

Those who manage to purchase the product at the lower price given by the price ceiling will
benefit, but sellers of the product will suffer, along with those who are not able to purchase the
product at all, quality is also likely to deteriorate.

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REFERENCES

https://www.thestar.com.my/news/nation/2018/08/27/sugar-prices-to-reduce-effective-sept-1/
https://www.thesundaily.my/archive/govt-set-ceiling-price-domestic-flights-JUARCH533748
https://www.thestar.com.my/news/nation/2014/06/30/prices-on-18-items-capped-for-aidilfitri/
https://www.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-
surplus/deadweight-loss-tutorial/a/price-ceilings-and-price-floors-cnx
https://www.thestar.com.my/business/business-news/2008/06/02/govt-to-abolish-cement-ceiling-
price/
https://www.thestar.com.my/opinion/letters/2018/03/21/ceiling-price-may-backfire/

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