Suppose the market equilibrium price of wheat is $5 per bushel, and the government sets a price floor of $7 per bushel to aid growers. What is the most likely result of this action?
A) There will be a shortage of wheat.
B) There will be a surplus of wheat.
C) There will be an increase in the quantity of wheat demanded as the result of the price floor.
D) There will be a decrease in the quantity of wheat supplied as the result of the price floor.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price leads to a surplus because the higher price reduces the quantity demanded and increases the quantity supplied.

Suppose the Market Equilibrium Price of Wheat Is $5 Per