Exhibit 5-2

The diagram below represents the market for butter.
-Refer to Exhibit 5-3. For a price floor to be binding in this market, it could be set at

Name: Exhibit 5-2 The diagram below represents the market for butter. -Refer to Exhibit 5-3. For a price floor to be binding in this market, it could be set at
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Question

Exhibit 5-2
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The diagram below represents the market for butter. 
-Refer to Exhibit 5-3. For a price floor to be binding in this market, it could be set at

Quizplus · Accepted Answer

A price floor is binding only if it is set above the equilibrium price. In this case, the equilibrium price is $25, so a price floor would need to be set above $25 to be binding.

Exhibit 5-2 ​

Exhibit 5-2