A price floor results in
ECONOMICS
WAEC 2016
A price floor results in
- A. excess demand
- B. excess supply
- C. parallel market
- D. hoarding of goods
Correct Answer: B. excess supply
Explanation
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.
Post an Explanation Or Report an Error
If you see any wrong question or answer, please leave a comment below and we'll take a look. If you doubt why the selected answer is correct or need additional more details? Please drop a comment or Contact us directly. Your email address will not be published. Required fields are marked *