A price floor (set above the equilibrium price)on rice will
A) force otherwise profitable farmers out of business.
B) result in a shortage of rice.
C) result in a surplus of rice.
D) clear the market for rice.
E) both a and b

Question

Quizplus · Accepted Answer

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

A Price Floor (Set Above the Equilibrium Price)on Rice Will