If the government sets a price floor above what would be the competitive market price of a product,a shortage of the product will develop.

Name: If the government sets a price floor above what would be the competitive market price of a product,a shortage of the product will develop.
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Question

Quizplus · Accepted Answer

A price floor set above the competitive market price leads to a surplus, not a shortage, because the higher price reduces demand and increases supply.

If the Government Sets a Price Floor Above What Would