Assume no price floor exists and a market has a given equilibrium. Then a price floor is established, which is above the market equilibrium. A shortage would result.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price would lead to a surplus, not a shortage, because it sets a minimum price that is higher than what consumers are willing to pay, resulting in excess supply.

Assume No Price Floor Exists and a Market Has a Given