Which would NOT happen as the result of a price floor?
A) a surplus of the good
B) lost gains from trade
C) misallocation of resources
D) decreases in product quality

Question

Quizplus · Accepted Answer

A price floor is a government-imposed minimum price that is above the equilibrium price. As a result, it creates a surplus of the good, lost gains from trade, and misallocation of resources due to inefficient production. However, it does not lead to decreases in product quality, as firms are incentivized to maintain or increase quality to justify the higher price.

Which Would NOT Happen as the Result of a Price