An effective price floor must be set
A) above the equilibrium price.
B) below the equilibrium price.
C) at the equilibrium price.
D) either at or below the equilibrium price.

Question

Quizplus · Accepted Answer

An effective price floor, which is a government- or group-imposed price control, must be set above the equilibrium price to have an impact. If set at or below the equilibrium price, the market forces would naturally drive the price to the equilibrium level, rendering the price floor ineffective.

An Effective Price Floor Must Be Set