Asked by Maryam Almamlouk on Apr 29, 2024
Verified
Suppose a market is in equilibrium.If a price floor is set in this market below the equilibrium price it is likely that:
A) quantity demanded will increase.
B) a surplus will arise.
C) a shortage will arise.
D) the quantity sold will rise.
E) the market will remain in equilibrium.
Price Floor
A minimum legal price below which a product cannot be sold; to have an impact, a price floor must be set above the equilibrium price.
Surplus
A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price.
- Comprehend how price floors lead to surpluses in markets.
Verified Answer
NG
Nicole GleavesMay 01, 2024
Final Answer :
E
Explanation :
A price floor set below the equilibrium price will not affect the market because the market price is already above the floor. Therefore, the market remains in equilibrium.
Learning Objectives
- Comprehend how price floors lead to surpluses in markets.