A market consequence of the establishment of a price floor program is that price will be:
A) too low, and an excess supply will result.
B) too low, and a shortage will result.
C) too high, and an excess supply will result.
D) too high, and a shortage will result.
E) below the market equilibrium price.

Question

Quizplus · Accepted Answer

A price floor set above the market equilibrium price results in a price that is too high, leading to excess supply as producers are willing to supply more than consumers are willing to buy at that price.

A Market Consequence of the Establishment of a Price Floor