The government has imposed a price control for many agricultural products in an effort to support farmers.In the case of price floor P₂ in the accompanying figure,how much of a disequilibrium in quantity exists? A) a shortage of 30,000 units B) a surplus of 120,000 units C) 30,000 units D) a surplus of 30,000 units E) an excess of $3

Question

Quizplus · Accepted Answer

The price floor creates a surplus because it sets the price above the equilibrium price. Therefore, there will be excess supply as quantity supplied will exceed quantity demanded. The disequilibrium quantity is the difference between quantity supplied and quantity demanded at the price floor. In the figure, the quantity supplied is 150,000 units and the quantity demanded is 120,000 units, making the disequilibrium quantity 30,000 units, which is a surplus. Therefore, the correct choice is D, a surplus of 30,000 units.

The Government Has Imposed a Price Control for Many Agricultural