TABLE 4-2

-Refer to Table 4-2. Suppose that D₁ and S₂ are the demand and supply schedules for Product A. What is the result if the government imposes a price floor of $12?

Question

TABLE 4-2
 
-Refer to Table 4-2. Suppose that D₁ and S₂ are the demand and supply schedules for Product A. What is the result if the government imposes a price floor of $12?

Quizplus · Accepted Answer

A price floor set above the equilibrium price creates a surplus. If the price floor is $12 and the equilibrium price is lower, the quantity supplied exceeds the quantity demanded, resulting in a surplus of 9 units.

TABLE 4-2 -Refer to Table 4-2. Suppose That D₁ and S₂ Are