Market demand is given as Q_D= 120 - 2P.Market supply is given as Q_S= P + 30.Which legally imposed price would constitute a binding price floor

Question

Quizplus · Accepted Answer

A binding price floor is set above the equilibrium price. The equilibrium price is found where Q_D = Q_S. Solving 120 - 2P = P + 30 gives P = 30. Therefore, a price floor above $30, such as $50, would be binding.

Market Demand Is Given as QD = 120 - 2P

Market Demand Is Given as Q_D= 120 - 2P