Question

g If a price floor is not binding, then Group of answer choices
there will be a surplus in the market.
the equilibrium price is above the price floor.
the equilibrium price is below the price floor.
Both a) and c) are correct.

Answer 1

Answer:

the equilibrium price is above the price floor. 

Explanation:

A price floor is the least amount a good or service can be sold. Price floors are usually set by the government or an agency of the government.

Binding price floors is usually set above equilibrium price.

Non binding price floor is usually set below the equilibrium price.

When price floor is below equilibrium price, it has no effect. Quantity demanded would increase over supply and there would be q shortage in the economy.

If price floor is binding, quantity supplied would be greater than quantity demanded and there would be a surplus.

I hope my answer helps you