Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,the
A) quantity supplied of milk falls short of the quantity demanded.
B) quantity supplied of milk exceeds the quantity demanded.
C) supply increases.
D) demand decreases.
E) price of milk remains $4 per gallon.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price ($5 instead of $4) causes the quantity supplied to exceed the quantity demanded because producers are willing to supply more at the higher price, but consumers are not willing to buy as much at that price, leading to a surplus.

Suppose the Equilibrium Price of a Gallon of Milk Is