A price floor that is set above the equilibrium price
A)causes suppliers to lower their prices.
B)is binding.
C)is non-binding.
D)creates a shortage.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price is binding because it prevents the market price from falling to its equilibrium level, leading to a surplus as suppliers are willing to supply more than consumers are willing to buy at that price.

A Price Floor That Is Set Above the Equilibrium Price