A price floor set below the equilibrium price will result in a surplus.

Price Floor

A government- or group-imposed limit on how low a price can be charged for a product, above the equilibrium price, leading to surpluses.

Surplus

A situation where the quantity supplied exceeds the quantity demanded at the current price; often refers to excess in budget or resources.

Identify the factors causing market imbalance and the adjustments markets make in response to shifts.

Verified Answer

Final Answer :

False

Explanation :

A price floor set below the equilibrium price will not result in a surplus, as it is not binding and will have no effect on the market.

Learning Objectives

Identify the factors causing market imbalance and the adjustments markets make in response to shifts.