Use the following to answer questions :
Figure 4-3
-If the government then decides to set a price floor of $20 for the market in Figure 4-3, there is excess supply and 60 units of goods will be purchased.

Question

Use the following to answer questions :
Figure 4-3 
-If the government then decides to set a price floor of $20 for the market in Figure 4-3, there is excess supply and 60 units of goods will be purchased.

Quizplus · Accepted Answer

If the government sets a price floor of $20, it will be above the equilibrium price of $15. This will cause a decrease in demand and an increase in supply, resulting in excess supply and a surplus of goods. Therefore, it is unlikely that 60 units of goods will be purchased.

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