Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?
A)Consumer surplus will increase.
B)Producer surplus will increase.
C)Deadweight loss will increase.
D)Market efficiency will increase.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price will lead to a surplus of sparkling wine, as the quantity supplied will exceed the quantity demanded. This results in a deadweight loss, as the market is not operating efficiently, and both consumer and producer surplus are reduced.

Suppose a Price Floor on Sparkling Wine Is Proposed by the Health