A price floor

Question

A price floor

Quizplus · Accepted Answer

All of the statements given in the options are correct. A price floor is a legally mandated minimum price below which a good cannot be sold. It may be set by the government to protect the interests of sellers or producers of a good who are struggling to make a profit at the current market price. However, the price floor can lead to market inefficiencies such as surplus production and deadweight loss. Additionally, it can create inequities in the market by benefiting some sellers at the expense of others and causing distortions in the allocation of resources.

A Price Floor