Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price.An increase in supply in both the wheat and gasoline markets will create:

Question

Quizplus · Accepted Answer

A price floor at the equilibrium price in the wheat market means the price cannot go lower, so an increase in supply will create a surplus. A price ceiling at the equilibrium price in the gasoline market means the price cannot go higher, so an increase in supply will allow more gasoline to be traded without creating a shortage.

Assume a Price Floor Is Imposed in the Wheat Market