Figure 4-A
The diagram below represents the market for butter.
-Refer to Figure 4-A.If a price floor of $4 is imposed, ____ units of butter will be sold.
A)7,000
B)5,000
C)4,000
D)3,000
E)2,000

Question

Figure 4-A
The diagram below represents the market for butter. 
-Refer to Figure 4-A.If a price floor of $4 is imposed, ____ units of butter will be sold.
A)7,000 
B)5,000 
C)4,000 
D)3,000 
E)2,000

Quizplus · Accepted Answer

With a price floor of $4, the price is set above the equilibrium price of $3. At the higher price, the quantity demanded decreases and the quantity supplied increases, resulting in a surplus. Therefore, only 3,000 units of butter will be sold, which is the amount where the quantity supplied equals the quantity demanded (where the supply and demand curves intersect).

Figure 4-A The Diagram Below Represents the Market for Butter