A price floor set above the equilibrium price will
A) clear the market for the good.
B) result in a shortage of the good.
C) result in a surplus of the good.
D) force some firms in this industry to go out of business.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price creates an artificial surplus of the good, as the quantity supplied exceeds the quantity demanded at the higher price. This can lead to inefficiency in the market, as some of the surplus may go to waste, and can also result in decreased profits for producers.

A Price Floor Set Above the Equilibrium Price Will