QuestionMay 31, 2025

Price floors typically result in __ quantify supplied equals quantity demanded excess demand C excess supply

Price floors typically result in __ quantify supplied equals quantity demanded excess demand C excess supply
Price floors typically result in __
quantify supplied equals quantity demanded
excess demand
C excess supply

Solution
4.4(263 votes)

Answer

excess supply Explanation 1. Define Price Floor A price floor is a minimum price set by the government above the equilibrium price. 2. Analyze Market Impact When a price floor is set above equilibrium, it leads to higher prices. 3. Determine Resulting Quantity Changes At this higher price, quantity supplied increases and quantity demanded decreases. 4. Identify Resulting Condition The increase in supply and decrease in demand creates excess supply.

Explanation

1. Define Price Floor<br /> A price floor is a minimum price set by the government above the equilibrium price.<br />2. Analyze Market Impact<br /> When a price floor is set above equilibrium, it leads to higher prices.<br />3. Determine Resulting Quantity Changes<br /> At this higher price, quantity supplied increases and quantity demanded decreases.<br />4. Identify Resulting Condition<br /> The increase in supply and decrease in demand creates excess supply.
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