Use the following to answer question 73:
-Suppose that the government sets a price floor of $2.85 per kilogram on corn when the current price is $2.55.This price floor will:
A) cause a surplus of corn.
B) cause a shortage of corn.
C) have no immediate effect on the price of corn.
D) increase the supply of corn.

Question

Use the following to answer question 73: 
-Suppose that the government sets a price floor of $2.85 per kilogram on corn when the current price is $2.55.This price floor will:
A) cause a surplus of corn. 
B) cause a shortage of corn. 
C) have no immediate effect on the price of corn. 
D) increase the supply of corn.

Quizplus · Accepted Answer

A price floor set above the current market price will lead to a surplus because the minimum price is higher than what consumers are willing to pay, resulting in excess supply.

Use the Following to Answer Question 73