A price floor is
A)a minimum allowable price set by government, and it causes a surplus if effective.
B)the equilibrium price.
C)a minimum allowable price set by government, and it causes a shortage if effective.
D)a maximum allowable price set by government, and it causes a shortage if effective.
E)a maximum allowable price set by government, and it causes a surplus if effective.

Question

Quizplus · Accepted Answer

A price floor is a minimum price set by the government above the equilibrium price, leading to a surplus if it is above the market-clearing price because suppliers are willing to supply more than consumers are willing to buy at that price.

A Price Floor Is