An equilibrium in the presence of price floors can be restored by increased consumer effort to obtain scarce goods.

Question

Quizplus · Accepted Answer

When price floors are imposed, the price of a product is set higher than the equilibrium price. This can create a surplus of goods as producers are incentivized to produce more at the higher price, but consumers may not want to pay the higher price. However, if consumers are willing to put in more effort to obtain the scarce goods, such as waiting in long lines or traveling farther to purchase them, then the excess supply will eventually be exhausted and an equilibrium can be restored. Therefore, the statement is true.

An Equilibrium in the Presence of Price Floors Can Be