Question on: WAEC Economics - 2016
A price floor results in
A
excess demand
B
excess supply
C
parallel market
D
hoarding of goods
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Correct Option: B
A price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low. When a market reaches a price floor, it results in an excess supply because quantity supplied at the price floor exceeds the quantity demanded.
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