If a price floor is set above the equilibrium price in the market, consumer surplus will be

Name: If a price floor is set above the equilibrium price in the market, consumer surplus will be
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Question

Quizplus · Accepted Answer

When a price floor is set above the equilibrium price in the market, it creates a surplus of supply which leads to a decrease in quantity demanded. This decrease in quantity demanded results in a reduction in consumer surplus. Hence, the consumer surplus will be lower than it would be without the price floor.

If a Price Floor Is Set Above the Equilibrium Price