If a beef market is in equilibrium at $4.00 per kg, an increase in price
ECONOMICS
WAEC 2020
If a beef market is in equilibrium at $4.00 per kg, an increase in price to $6.00 per kg may cause
- A. surplus in the market
- B. shortage in the in market
- C. black market to come into operation
- D. rationing to be introduced
Correct Answer: A. surplus in the market
Explanation
When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply or surpluses will result.
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