-Refer to the above figure. Other things being equal, when the government imposes a price floor at P₂, then we would expect
A)the quantity demanded is Q₂.
B)a surplus will occur.
C)price to decline until an equilibrium is achieved at P₀.
D)consumers to bid against each other for goods and force the price even higher.

Question

-Refer to the above figure. Other things being equal, when the government imposes a price floor at P₂, then we would expect
A)the quantity demanded is Q₂. 
B)a surplus will occur. 
C)price to decline until an equilibrium is achieved at P₀. 
D)consumers to bid against each other for goods and force the price even higher.

Quizplus · Accepted Answer

A price floor set above the equilibrium price (P₂) leads to a surplus because the quantity supplied exceeds the quantity demanded at that price.

-Refer to the Above Figure