If a binding price floor is imposed on the video game market,then
A)the demand for video games will decrease.
B)the supply of video games will increase.
C)a surplus of video games will develop.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When a binding price floor is imposed, it sets a minimum price higher than the equilibrium price. This means that producers are required to sell their products at a higher price than what consumers are willing to pay, leading to a decrease in demand. As a result, a surplus of unsold products will begin to develop. Therefore, option C, a surplus of video games will develop, is the correct choice. The supply of video games will not necessarily increase as producers may reduce production due to the drop in demand caused by the price floor.

If a Binding Price Floor Is Imposed on the Video