A price floor set below the equilibrium price is binding.

Name: A price floor set below the equilibrium price is binding.
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Question

Quizplus · Accepted Answer

A price floor set below the equilibrium price is not binding, as it does not affect the market outcome. Only a price floor set above the equilibrium price is binding, as it creates a surplus of the good, which must be addressed through some form of government intervention.

A Price Floor Set Below the Equilibrium Price Is Binding