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Question

When a price floor is above the equilibrium price ________________.
  1. quantity demanded will exceed quantity supplied
  2. quantity supplied will exceed quantity demanded
  3. the market will be in equilibrium
  4. this is a trick question because price floors generally exist below the equilibrium price

A
this is a trick question because price floors generally exist below the equilibrium price
B
quantity demanded will exceed quantity supplied
C
the market will be in equilibrium
D
quantity supplied will exceed quantity demanded
Solution
Verified by Toppr

When the quantity supplied is equal to the quantity demanded it is called the equilibrium point. When the price floor is above the equilibrium price, the quantity supplied will exceed the quantity demanded as will create surplus supply due to higher price and a simultaneous fall in demand.

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