Explain the meaning of ceiling price and state a reason for the government to implement it on petrol.

A ceiling price is a government-imposed price control or limit on how high a price is charged for a product. It is set by law and limits the maximum price a seller can charge for a product or service.

The government may implement a ceiling price on petrol for several reasons. One of the main reasons is to protect consumers, especially those with lower incomes, from price gouging or excessively high prices. By setting a maximum price, the government ensures that petrol remains affordable for all consumers, which is particularly important as petrol is a necessity for many people.

Another reason is to control inflation. If the price of petrol rises too quickly, it can lead to inflation, as the cost of transport affects the price of goods and services. By controlling the price of petrol, the government can help to keep inflation in check.

Finally, a ceiling price can also be used to prevent monopolies or oligopolies from exploiting their market power. If there are only a few sellers of petrol, they may be tempted to raise prices excessively. A ceiling price prevents this from happening.