Answer to Question #201220 in Microeconomics for loureta

Question

what would we expect to happen to the market when the government imposes a price floor below equilibrium

Answer 1

When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result. When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply or surpluses will result.