A price floor (set above the equilibrium price)on rice will
A)force otherwise profitable farmers out of business.
B)result in a shortage of rice.
C)result in a surplus of rice.
D)clear the market for rice.

Question

Quizplus · Accepted Answer

When a price floor is set above the equilibrium price, it creates a situation where the price consumers are willing to pay is lower than the price producers are required to charge. This effectively creates a surplus of the good, as producers are incentivized to produce more than consumers are willing to buy. In the case of rice, this would result in a surplus of rice.

A Price Floor (Set Above the Equilibrium Price)on Rice Will