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Figure: Understanding Price Ceilings and Floors
-(Figure: Understanding Price Ceilings and Floors)In the graph,which price would NOT allow for an effective price floor?

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Use the following to answer questions 
Figure: Understanding Price Ceilings and Floors 
-(Figure: Understanding Price Ceilings and Floors)In the graph,which price would NOT allow for an effective price floor?

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In order for a price floor to be effective, it must be set above the equilibrium price. In the graph, the equilibrium price is $70. Therefore, any price floor set above $70 would be effective. However, if the price floor is set at or below $70, it would not be effective. Option D of $50 is below the equilibrium price, and hence, would not allow for an effective price floor.

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