An effective price floor will lead to:
A)quantity demanded being greater than quantity supplied.
B)an excess supply or a surplus.
C)the need for government to produce more of the good.
D)suppliers determining the amount of the good bought and sold in the market.

Question

Quizplus · Accepted Answer

An effective price floor sets a minimum price above the equilibrium price, and as a result, results in an excess supply or surplus as quantity supplied exceeds the quantity demanded at that higher price. Option A is incorrect as quantity demanded will be less than quantity supplied, and options C and D are incorrect as the government does not typically produce or dictate the amount of a good bought and sold in the market.

An Effective Price Floor Will Lead To