A market consequence of the establishment of a price floor program is that price will be:
A)too low and an excess supply will result.
B)too low and a shortage will result.
C)below the market equilibrium price.
D)too high and a shortage will result.
E)too high and an excess supply will result.

Question

Quizplus · Accepted Answer

A price floor set above the market equilibrium price results in a price that is too high, leading to excess supply as producers are willing to supply more than consumers are willing to buy at that price.

A Market Consequence of the Establishment of a Price Floor