The consequence of a price floor set below the equilibrium price is
A) a surplus,where the quantity demanded exceeds the quantity supplied.
B) a shortage,where the quantity demanded exceeds the quantity supplied.
C) a surplus,where the quantity supplied exceeds the quantity demanded.
D) a shortage,where the quantity supplied exceeds the quantity demanded.
E) nothing; the price floor will have no impact on the quantity demanded or the quantity supplied.

Question

Quizplus · Accepted Answer

A price floor set below the equilibrium price does not affect the market because the market price is already above the floor. The price floor is intended to ensure prices do not fall below a certain level, but if it's set below where the market naturally balances supply and demand, it's ineffective and does not impact the quantities demanded or supplied.

The Consequence of a Price Floor Set Below the Equilibrium