Refer to the information provided in Figure 4.3 below to answer the question(s) that follow. Figure 4.3
-Refer to Figure 4.3. An example of an effective price floor would be the government setting the price of pencils at
A) $0.00.
B) $0.40.
C) $0.45.
D) $0.50.

Question

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow.  Figure 4.3
-Refer to Figure 4.3. An example of an effective price floor would be the government setting the price of pencils at
A) $0.00. 
B) $0.40. 
C) $0.45. 
D) $0.50.

Quizplus · Accepted Answer

A price floor is effective when it is set above the equilibrium price. Since the equilibrium price is not provided, we can infer from the options that setting the price at the highest value ($0.50) would most likely create a situation where the price floor is above the equilibrium price, making it effective.

Refer to the Information Provided in Figure 4