In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

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A price floor is a government intervention to set a minimum price for a good or service. In a competitive market, the equilibrium price is where the demand and supply curves intersect, which is at $15 in this case. If a price floor is set below the equilibrium price, it will have no effect on the market as the market price is already higher. If a price floor is set at $15 or below, it will be ineffective as the market price is still $15. Therefore, the only way for a price floor to be effective is to set it above $15, which is choice C.

In a Competitive Market Illustrated by the Diagram Above, for a Price