A price floor is usually fixed

  • A at the equilibrium and causes no shortage
  • B above the equilibrium and causes shortage
  • C below the equilibrium and causes surpluses
  • D above the equilibrium and causes surpluses

The correct answer is D. above the equilibrium and causes surpluses

Price floor or minimum price legislation is when price is fixed above the equilibrium. When the government fix the price above the equilibrium, there will be excess supply over demand and there will be surplus.

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