A price floor is a minimum legal price set by the government. It is intended to prevent the price of a particular good or service from falling below a certain level, which can benefit producers but potentially harm consumers. A price floor is often set above the equilibrium price, which can create excess supply and lead to market inefficiencies.

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A Price Floor Is

Question 66

Multiple Choice

A price floor is:

A) a maximum legal price set by government.
B) likely to result in excess demand.
C) a minimum legal price set by government.
D) a price less than the equilibrium price.

Correct Answer: