When a binding price floor is imposed on a market,
A)price no longer serves as a rationing device.
B)the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor.
C)all sellers benefit.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When a binding price floor is imposed on a market, price no longer serves as a rationing device. This means that the market cannot adjust to balance the quantity supplied with the quantity demanded, leading to a surplus of goods. The quantity demanded at the price floor is likely to be lower than the quantity supplied, as the price is pushed above the equilibrium level. This means that buyers are not willing to purchase as much as sellers are willing to offer at the higher price, leading to excess supply. While some sellers may benefit from the price floor, this is not necessarily true for all sellers in the market.

When a Binding Price Floor Is Imposed on a Market