Exhibit 5-2

The diagram below represents the market for butter.
-Refer to Exhibit 5-3. Which of the following price controls would cause a surplus of 20 units of the good?

Question

Exhibit 5-2
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The diagram below represents the market for butter. 
-Refer to Exhibit 5-3. Which of the following price controls would cause a surplus of 20 units of the good?

Quizplus · Accepted Answer

A price floor set at $35 would cause a surplus of 20 units because it sets the minimum price above the equilibrium price, leading to lower demand and higher supply than at equilibrium.

Exhibit 5-2 ​

Exhibit 5-2