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Figure: The Market for Butter
-(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.20 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million kilograms of butter.
A) surplus;4.5
B) shortage;4.5
C) surplus;1.5
D) shortage;1.5

Question

Use the following to answer questions:
Figure: The Market for Butter 
-(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.20 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million kilograms of butter.
A) surplus;4.5 
B) shortage;4.5 
C) surplus;1.5 
D) shortage;1.5

Quizplus · Accepted Answer

A price floor set above the equilibrium price creates a surplus because the quantity supplied exceeds the quantity demanded.

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