Suppose that one knows two facts: the market for toothpaste experiences chronic surpluses and the government sets the price of toothpaste.One can infer that the
A) government has established a price ceiling for toothpaste.
B) quantity of toothpaste demanded exceeds the quantity of toothpaste supplied.
C) government has established a price floor for toothpaste.
D) supply of toothpaste exceeds the demand for toothpaste.
E) government is trying reduce the incidence of cavities in children's teeth.

Question

Quizplus · Accepted Answer

The presence of chronic surpluses indicates that the price is set above the equilibrium level, which is characteristic of a price floor.

Suppose That One Knows Two Facts: the Market for Toothpaste