Table 3.5: the data show the demand and supply for sugar in thousands of kilos.

-Using the data in Table 3.5, what would happen if the government were to establish an effective price floor of $3 per kilogram of sugar?

Question

Table 3.5: the data show the demand and supply for sugar in thousands of kilos.
 
-Using the data in Table 3.5, what would happen if the government were to establish an effective price floor of $3 per kilogram of sugar?

Quizplus · Accepted Answer

A price floor set above the equilibrium price leads to a surplus because the quantity supplied exceeds the quantity demanded. In this case, with a price floor of $3, suppliers would want to sell more sugar than consumers are willing to buy, resulting in a surplus of 40,000 kilograms of sugar.

Table 35: the Data Show the Demand and Supply for Sugar