FIGURE 5- 2
-Refer to Figure 5- 2. A price floor set at $2.50 will result in
A) a surplus of 5 units.
B) a surplus of 10 units
C) a shortage of 10 units.
D) a shortage of 5 units.
E) no change to the market outcomes.

Question

FIGURE 5- 2
-Refer to Figure 5- 2. A price floor set at $2.50 will result in
A) a surplus of 5 units. 
B) a surplus of 10 units 
C) a shortage of 10 units. 
D) a shortage of 5 units. 
E) no change to the market outcomes.

Quizplus · Accepted Answer

A price floor set above the equilibrium price will result in a surplus. If the equilibrium price is below $2.50, setting the price floor at $2.50 will cause quantity supplied to exceed quantity demanded, resulting in a surplus of 10 units.

FIGURE 5- 2 -Refer to Figure 5- 2. a Price Floor Set at Floor