Suppose the market in the graph shown is in equilibrium. If a price floor is set at $13, the total number of units traded:

Question

Quizplus · Accepted Answer

When a price floor is set above the equilibrium price, a surplus is created in the market, as quantity supplied exceeds quantity demanded at the higher price. In this case, the equilibrium price is $11 and the equilibrium quantity is 17 units. If a price floor is set at $13, the quantity supplied will increase to 24 units, while the quantity demanded will decrease to 14 units, resulting in a surplus of 10 units (24-14=10). Therefore, the total number of units traded will fall by 3 units (17-14=3).

Suppose the Market in the Graph Shown Is in Equilibrium