FIGURE 5-2
-Refer to Figure 5-2.A price floor set at a price of $1.00 will result in
A)a shortage of 10 units.
B)a shortage of 20 units.
C)a surplus of 10 units.
D)a surplus of 20 units.
E)no change in the market outcomes.

Question

FIGURE 5-2
-Refer to Figure 5-2.A price floor set at a price of $1.00 will result in
A)a shortage of 10 units. 
B)a shortage of 20 units. 
C)a surplus of 10 units. 
D)a surplus of 20 units. 
E)no change in the market outcomes.

Quizplus · Accepted Answer

A price floor set at $1.00 will not affect the market if the equilibrium price is above $1.00, as it would be non-binding. Therefore, there would be no change in the market outcomes.

FIGURE 5-2 -Refer to Figure 5-2.A Price Floor Set at a Price