A price floor is usually fixed

Assessment: JAMB UTME - Economics - 2022 Subject: Economics

Question 1 Report

A price floor is usually fixed
Answer Details
A price floor is typically set above the equilibrium price, and it creates a surplus of goods or services. When the price is set above the equilibrium level, it causes suppliers to offer more products than buyers are willing to purchase at that higher price. This leads to a surplus, where there are more goods available than there are buyers willing to buy them. Therefore, a price floor usually causes surpluses, and not shortages.
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