A price floor
A) changes the equilibrium price if it is imposed in black markets.
B) changes the price and quantity if it is set below the equilibrium price.
C) changes the price and quantity if it is set above the equilibrium price.
D) does not create a black market if it is set above the equilibrium price.
E) changes the price and quantity only if it equals the equilibrium price.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price changes the price and quantity by creating a surplus, as the minimum price is higher than what the market would naturally set, leading to less quantity being bought.

A Price Floor