QuestionMay 31, 2025

Suppose the government sets a price floor below the current price of a good. This price floor will: A) result in an excess supply of the good. B) result in an excess demand for the good. C) have no immediate effect on the price of the good. D) increase the quantity supplied of the good.

Suppose the government sets a price floor below the current price of a good. This price floor will: A) result in an excess supply of the good. B) result in an excess demand for the good. C) have no immediate effect on the price of the good. D) increase the quantity supplied of the good.
Suppose the government sets a price floor below the current price of a good. This
price floor will:
A) result in an excess supply of the good.
B) result in an excess demand for the good.
C) have no immediate effect on the price of the good.
D) increase the quantity supplied of the good.

Solution
4.3(285 votes)

Answer

C) have no immediate effect on the price of the good. Explanation 1. Understand Price Floor Concept A price floor is a minimum price set by the government. If it's below the current market price, it doesn't affect the market. 2. Analyze Immediate Effect Since the price floor is below the current price, it does not interfere with the market equilibrium.

Explanation

1. Understand Price Floor Concept<br /> A price floor is a minimum price set by the government. If it's below the current market price, it doesn't affect the market.<br />2. Analyze Immediate Effect<br /> Since the price floor is below the current price, it does not interfere with the market equilibrium.
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