Market demand is given as QD = 200 - 3P.Market supply is given as QS = 2P + 100.Which legally imposed price would constitute a binding price floor?
A) $10
B) $20
C) $50
D) $70

Question

Market demand is given as QD = 200 - 3P.Market supply is given as QS = 2P + 100.Which legally imposed price would constitute a binding price floor?  
A) $10 
B) $20 
C) $50 
D) $70

Quizplus · Accepted Answer

A binding price floor is set above the equilibrium price. To find the equilibrium price, set QD = QS: 200 - 3P = 2P + 100. Solving this equation gives P = $20 as the equilibrium price. Therefore, a price floor above $20, such as $50, would be binding.

Market Demand Is Given as QD = 200 - 3P