If order to be relevant the price floor must be

Question

Quizplus · Accepted Answer

The purpose of a price floor is to ensure that the price of a good or service does not fall below a certain level. If the price floor is set at or below the equilibrium price, then it has no effect and is irrelevant. However, if the price floor is set above the equilibrium price, it can create a surplus of the good or service because producers are producing more than consumers are willing to buy at that price. Therefore, to be relevant, the price floor must be set above the equilibrium price.

If Order to Be Relevant the Price Floor Must Be