A market consequence of a price floor program is that:
A) a shortage of the product will develop.
B) producers will stop supplying the product.
C) some rationing device must then be instituted.
D) a surplus of the product will develop.
E) there will be an excess demand for the product.

Question

Quizplus · Accepted Answer

A price floor program sets a minimum price for a product, which is higher than the equilibrium price. This means that the price is artificially inflated and will likely result in a surplus of the product, as producers will supply more than consumers demand at the higher price. This surplus may lead to waste or the need for alternative methods of disposal.

A Market Consequence of a Price Floor Program Is That