Which of the following is most likely to generate a surplus?
A) A price floor
B) A price ceiling
C) An illegal market
D) All of these

Question

Quizplus · Accepted Answer

A price floor, which sets a minimum price higher than the equilibrium price, is most likely to generate a surplus as the quantity supplied exceeds the quantity demanded. A price ceiling, which sets a maximum price lower than the equilibrium price, is more likely to generate a shortage as the quantity demanded exceeds the quantity supplied. An illegal market operates outside of legal channels and may or may not generate a surplus depending on various factors. Therefore, D is not the correct answer.

Which of the Following Is Most Likely to Generate a Surplus