Suppose a price floor is set by the government above the market equilibrium price. Which of the following will result?

Question

Quizplus · Accepted Answer

When a price floor is set above the market equilibrium price, it creates a situation where the quantity supplied exceeds the quantity demanded, resulting in a surplus. This is because producers are willing to supply more goods at the higher price, but consumers are not willing to buy as much at the higher price.

Suppose a Price Floor Is Set by the Government Above