Assume the demand for a product is perfectly inelastic.If government establishes a price floor that is $2 above the equilibrium price,the resulting:

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Quizplus · Accepted Answer

Since the demand is perfectly inelastic, consumers will buy the same quantity regardless of price. A price floor above equilibrium causes a surplus, not a shortage. The surplus is larger when supply is more elastic because suppliers are more responsive to price changes, increasing quantity supplied at the higher price.

Assume the Demand for a Product Is Perfectly Inelastic