A price floor policy establishes a minimum price for a market. Which of the following results from a binding price floor?
A) Equilibrium
B) Excess demand
C) Excess supply
D) Shortage

Question

Quizplus · Accepted Answer

A binding price floor, set above the equilibrium price, results in excess supply because the minimum price is higher than what consumers are willing to pay, leading to unsold surplus.

A Price Floor Policy Establishes a Minimum Price for a Market