Question on: JAMB Economics - 2024
A price floor is usually fixed
A
above the equilibrium and causes surpluses
B
below the equilibrium and causes surpluses
C
above the equilibrium and causes shortage
D
at the equilibrium and causes no shortage
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Correct Option: A
A price floor is a minimum price set by the government above which a good or service cannot be sold.
- Above Equilibrium: When a price floor is set above the equilibrium price, the quantity supplied exceeds the quantity demanded.
- Surpluses: This excess supply results in a surplus of the good or service.
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