Asked by Gisell Garcia on Jul 17, 2024
Verified
A price floor set above the equilibrium price causes a surplus in the market.
Price Floor
A government-imposed minimum price charged on a product, below which it cannot be sold to prevent market prices from falling too low.
Surplus
An excess of revenues over expenses in a budget, or an excess of goods or materials than what is needed.
- Familiarize oneself with the idea of price floors, including the motivations behind them and their repercussions on markets.
Verified Answer
MG
Michelle GutierrezJul 19, 2024
Final Answer :
True
Explanation :
A price floor set above the equilibrium price makes the price of a good higher than what consumers are willing to pay, leading to a surplus because the quantity supplied exceeds the quantity demanded.
Learning Objectives
- Familiarize oneself with the idea of price floors, including the motivations behind them and their repercussions on markets.