Suppose the government sets a price floor that is above the equilibrium price for a given good. It can be said that at the price floor,
A)although sellers are selling all of the product that they desire at this price, the consumers are not able to buy all that they desire.
B)although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire.
C)both sellers and buyers are satisfied with the quantity that is being exchanged.
D)both sellers and buyers are exchanging the equilibrium quantity of this good.

Question

Quizplus · Accepted Answer

With the price floor set above the equilibrium price, the quantity demanded by consumers will decrease while the quantity supplied by sellers will increase. This leads to a surplus of the good, with sellers not able to sell all that they desire at this higher price while consumers are purchasing all they desire. Therefore, option B is correct.

Suppose the Government Sets a Price Floor That Is Above