If a non-binding price floor were to be set in the market in the graph shown,it could be set at:

Question

Quizplus · Accepted Answer

A non-binding price floor is set above the equilibrium price but below the price at which demand intersects the x-axis. In this graph, the price where demand intersects the x-axis is $20. Therefore, a non-binding price floor could be set at $16, which is above the equilibrium price of $10 but below the price where demand intersects the x-axis. Setting the price floor at $23 or $30 would be a binding price floor and would result in a surplus of the good.

If a Non-Binding Price Floor Were to Be Set in the Market