(Table: Quantity Supplied and Quantity Demanded in the Market for Magazine Subscriptions) Use Table: Quantity Supplied and Quantity Demanded in the Market for Magazine Subscriptions. The government institutes a price floor, and as a result, too many resources are allocated to the production of the good. Given this, which dollar amount is a possible value of the price floor in this market?
A)$5
B)$10
C)$15
D)$20

Question

(Table: Quantity Supplied and Quantity Demanded in the Market for Magazine Subscriptions) Use Table: Quantity Supplied and Quantity Demanded in the Market for Magazine Subscriptions. The government institutes a price floor, and as a result, too many resources are allocated to the production of the good. Given this, which dollar amount is a possible value of the price floor in this market? 
A)$5 
B)$10 
C)$15 
D)$20

Quizplus · Accepted Answer

A price floor is a government-imposed minimum price that must be paid for a good or service. In this market, a price floor will result in too many resources being allocated to the production of the good, leading to a surplus of magazines. This means that the price floor must be set above the equilibrium price of $10. The only possible value in the given options that is higher than the equilibrium price is $20, making option D the correct choice.