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Figure: Determining Surplus and Loss
-(Figure: Determining Surplus and Loss)In the graph,which price would NOT allow for an effective price floor?

Question

Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss)In the graph,which price would NOT allow for an effective price floor?

Quizplus · Accepted Answer

A price floor is only effective if it is set above the equilibrium price. In this graph, the equilibrium price is $10, so prices lower than $10, such as $8, would not allow for an effective price floor. B, C, and D are all prices above the equilibrium price and could result in a surplus or a loss depending on the level of the price floor.

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