Neo-classical economic theory suggests which of the following to be true about a price-floor?
A) A price-floor imposed below the equilibrium price will be non-binding.
B) A price-floor imposed above the equilibrium price will lead to a shortage.
C) A price-floor imposed below the equilibrium price will lead to a surplus.
D) A price-floor imposed below the equilibrium price will be binding.

Question

Quizplus · Accepted Answer

A price-floor set below the equilibrium price does not affect the market because the market price is naturally above the floor, making it non-binding.

Neo-Classical Economic Theory Suggests Which of the Following to Be