Suppose the equilibrium price of a physical examination ("physical")by a doctor is $200,and the government imposes a price floor of $250 per physical.As a result of the price floor,

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When the government imposes a price floor, it sets a minimum price that legal transactions can take place. In this case, the price floor of $250 is higher than the equilibrium price of $200, so there will be a surplus of physicals. Because doctors are only willing to perform a certain quantity of physical exams at a given price, the quantity supplied of physical exams will not increase. However, the higher price will decrease the quantity demanded of physicals because some consumers will not be willing to pay the new higher price. Therefore, the number of physicals performed will decrease. Choice C correctly identifies that the quantity demanded of physicals decreases, and the quantity of physicals doctors want to give increases due to the higher price.

Suppose the Equilibrium Price of a Physical Examination ("Physical")by a Doctor