What is the term for a price set below the market equilibrium by the authorities?

The term for a price set below the market equilibrium by authorities is known as a maximum price. This regulatory measure is implemented to protect consumers by ensuring that the prices of essential goods or services remain affordable. When a maximum price is set, it prevents sellers from charging more than a specified amount, which can lead to an increase in demand. However, because the price is held below the equilibrium level where supply equals demand, this often results in a shortage of the good or service, as suppliers may be unwilling to sell at the lower price.

Setting a maximum price is typically used in scenarios involving essential commodities like food and housing, where governments aim to make sure that individuals can access these necessities without financial strain.