If a government-imposed price floor legally sets the price of milk above market equilibrium, which of the following will most likely happen?
A) The quantity of milk demanded will increase.
B) The quantity of milk supplied will decrease.
C) There will be a surplus of milk.
D) There will be a shortage of milk.

Question

Quizplus · Accepted Answer

A price floor set above the market equilibrium price will result in a surplus because the higher price encourages producers to supply more milk than consumers are willing to buy at that price.

If a Government-Imposed Price Floor Legally Sets the Price of Milk