Answer to Question #129373 in Microeconomics for arshiam Zafar

Question

Market equilibrium occurs at the upper section of linear demand curve, what will happen to the total revenue of ice-cream seller when government imposes binding price floor in ice-cream market..

Answer 1

Since the price of ice-cream will be above the equilibrium price , some buyers will decline to purchase the ice-cream leading to most of the ice-cream going unsold. Hence the total revenue of ice-cream seller will drop.