When a binding price floor is imposed on a market to benefit sellers,

Question

Quizplus · Accepted Answer

When a binding price floor is imposed on a market, it sets a minimum price that is higher than the market equilibrium price. As a result, some sellers may benefit because they are able to sell their goods at the higher price, but some sellers may be harmed because they are unable to sell their goods at the higher price and may therefore be forced to reduce their production or exit the market altogether. Therefore, some sellers benefit and some sellers are harmed when a binding price floor is imposed to benefit sellers.

When a Binding Price Floor Is Imposed on a Market