Exhibit 7-12
-Refer to Exhibit 7-12. When the price floor is implemented, the price changes to ____ and the output bought by consumers changes to ____.

Question

​Exhibit 7-12 
-Refer to Exhibit 7-12. When the price floor is implemented, the price changes to ____ and the output bought by consumers changes to ____.

Quizplus · Accepted Answer

When the price floor is implemented, the price changes to P₂ and the output bought by consumers changes to Q₂. This is because the price floor creates a minimum price for the good, which is above the equilibrium price. This results in an excess supply of the good, as producers are willing to sell more than consumers are willing to buy at the higher price. The excess supply puts downward pressure on the price, pushing it toward the equilibrium price. In this case, the equilibrium price is P₁, but the price floor prevents it from falling below P₂. The quantity bought by consumers will be at the new equilibrium point Q₂.

​Exhibit 7-12 -Refer to Exhibit 7-12. When the Price Floor Is Implemented

Exhibit 7-12 -Refer to Exhibit 7-12. When the Price Floor Is Implemented