A binding price floor means that:

Question

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A binding price floor is a minimum legal price set by the government that is above the equilibrium price. This means that the government mandates that sellers cannot sell their goods below a certain price, which leads to a situation where the quantity supplied exceeds the quantity demanded, resulting in a surplus. This can occur in markets with highly inelastic demand, such as agricultural products, where a price floor is sometimes used to ensure a stable income for farmers.

A Binding Price Floor Means That