Asked by Madison Bradford on May 27, 2024
Verified
Refer to Figure 6-18. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?
Price Floor
A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, often above the equilibrium price.
Shortage/Surplus
Economic conditions where the quantity of a good demanded exceeds its supply (shortage) or where supply exceeds demand (surplus).
- Understand the consequences of implementing price caps and minimum prices on market balance.
- Decode graphical illustrations of market conditions affected by government-enforced price regulations.
Verified Answer
GC
Geetanjali ChughMay 27, 2024
Final Answer :
A price floor set at $9 would not be binding, so there would be neither a shortage nor a surplus.
Learning Objectives
- Understand the consequences of implementing price caps and minimum prices on market balance.
- Decode graphical illustrations of market conditions affected by government-enforced price regulations.