Assume that excessive lobbying by tea cultivators led to the announcement of a price floor higher than the equilibrium price of tea.This legislation is likely to result in a shortage of tea leaves in the market.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price would lead to a surplus of tea leaves, not a shortage, because producers would be willing to supply more at the higher price, but consumers would not be willing to buy as much at that price.

Assume That Excessive Lobbying by Tea Cultivators Led to the Announcement