Refer to the information provided in Figure 4.3 below to answer the question(s) that follow. Figure 4.3
-Refer to Figure 4.3. Retailers will have an excess supply of pencils if the government will not allow retailers to charge less than ________ for a pencil.
A) $0.50
B) $0.45
C) $0.40
D) the equilibrium price

Question

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow.  Figure 4.3
-Refer to Figure 4.3. Retailers will have an excess supply of pencils if the government will not allow retailers to charge less than ________ for a pencil.
A) $0.50 
B) $0.45 
C) $0.40 
D) the equilibrium price

Quizplus · Accepted Answer

An excess supply occurs when the price is set above the equilibrium price. If the government sets a price floor at $0.50, which is above the equilibrium price, retailers will have an excess supply of pencils.

Refer to the Information Provided in Figure 4