Question

Suppose the government sets a price floor of $4.85 per bushel of wheat when the equilibrium price is $4.55 per bushel. This price floor will:

Answer 1

This price floor would lead to an excess in the supply of wheat.

What is the effect of the price floor?

A price floor is when the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.

The price floor ($4.85) is set above equilibrium price ($4.55), quantity supplied would exceed quantity demanded and there would be a surplus.

To learn more about price floor, please check: https://brainly.com/question/26551616

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