A price floor (support price) set above equilibrium:
A) is a minimum legal price set by government above equilibrium.
B) causes the quantity supplied to exceed the quantity demanded.
C) creates a surplus.
D) can represent the effect of a minimum wage.
E) all of these.

Question

Quizplus · Accepted Answer

A price floor set above equilibrium is a minimum legal price set by government above equilibrium. This causes the quantity supplied to exceed the quantity demanded, leading to a surplus. This concept is similar to the effect of a minimum wage, which is also a price floor set above the equilibrium wage. Therefore, all of the given options are correct.

A Price Floor (Support Price) Set Above Equilibrium