Governments sometime create an excess demand for a product by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product. This is known as a price floor.

Question

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Governments create a permanent excess supply of a product by setting a price floor that is above the equilibrium price, not a price ceiling (maximum price) that is below the equilibrium price.

Governments Sometime Create an Excess Demand for a Product by Setting