The harmful effect of a price floor to ________ is ________.
A) producers; the selling price of the product is below the equilibrium price
B) producers; the floor creates a surplus of the product
C) consumers; the selling price of the product is below the equilibrium price
D) consumers; the floor creates a shortage of the product

Question

Quizplus · Accepted Answer

A price floor, when set above the equilibrium price, leads to a surplus because it sets the minimum price at which a product can be sold, which is higher than what the market would naturally set. This results in producers not being able to sell all of their product, as the price is too high for consumers to purchase the entire supply, leading to a surplus.

The Harmful Effect of a Price Floor to ________ Is