If the province of Quebec established a price floor in the market for pumpkins that was double the current market-clearing price,this would lead to an inefficient number of pumpkins sold in Quebec.

Question

Quizplus · Accepted Answer

When a price floor is established above the market-clearing price, it creates a surplus of the product as producers are incentivized to produce more than the consumers demand at that higher price. This would mean that there would be an inefficient number of pumpkins sold in Quebec, as there would be more pumpkins produced than the market demands at that higher price.

If the Province of Quebec Established a Price Floor in the Market