A price floor is binding when it is set
A)above the equilibrium price,causing a shortage.
B)above the equilibrium price,causing a surplus.
C)below the equilibrium price,causing a shortage.
D)below the equilibrium price,causing a surplus.

Question

Quizplus · Accepted Answer

A price floor is binding when it is set above the equilibrium price, leading to a surplus because the minimum price is higher than what the market would naturally set, resulting in excess supply.

A Price Floor Is Binding When It Is Set