What is the difference between a price support and a price floor?
A) A price support is below equilibrium; a price floor is above it.
B) A price support is above equilibrium; a price floor is below it.
C) Government buys the excess supply to maintain a price floor, but not a price support.
D) Government buys the excess supply to maintain a price support, but not for a price floor.
E) There is no difference between the two.

Question

Quizplus · Accepted Answer

A price support involves government intervention to maintain a minimum price by buying up excess supply, whereas a price floor is a legally established minimum price above which the market price cannot fall, but does not necessarily involve government purchase of excess supply.

What Is the Difference Between a Price Support and a Price