A price floor set above the equilibrium price
A) creates a surplus.
B) creates a shortage.
C) creates excess demand.
D) balances supply and demand.
E) has no effect.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price creates a surplus because quantity supplied exceeds quantity demanded at the higher price. Suppliers are willing to sell more at the higher price, but demanders are not willing to buy as much. This leads to excess quantity supplied, or a surplus.

A Price Floor Set Above the Equilibrium Price