Market demand is given as Q_D= 300 - P.Market supply is given as Q_S= 2P.Which legally imposed price would constitute a binding price floor

Question

Quizplus · Accepted Answer

A binding price floor occurs when the legal minimum price is set above the market equilibrium price. To find the equilibrium price, we need to set the market demand equal to the market supply:
300 - P = 2P
Solving for P, we get: P = $100
Therefore, any legally imposed price floor above $100 would be binding. The only choice that fits this criteria is D, $125.

Market Demand Is Given as QD = 300 - P

Market Demand Is Given as Q_D= 300 - P