Exhibit 4-3 Refer to Exhibit 4-3. If price P₁ is a price floor, then A)the quantity exchanged is Q_1. B)there is a surplus in the market for good X. C)it is the lowest price that can legally be charged in the market for good X. D)the market is in equilibrium at price P₁.

Question

Quizplus · Accepted Answer

A price floor is a legal minimum price that can be charged for a good or service in a market. Therefore, if P₁ is a price floor, it is the lowest price that can legally be charged in the market for good X. A price floor often leads to a surplus in the market for the good. However, without additional information about the demand and supply conditions in this market, we cannot determine the quantity exchanged or whether the market is in equilibrium.

Exhibit 4-3 Refer to Exhibit 4-3. If Price P1 Is a Price

Exhibit 4-3 Refer to Exhibit 4-3. If Price P₁ Is a Price