To Affect The Market Outcome A Price Floor

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To affect the market outcome a price floor.

Previous question next question get more help from chegg. Must be set above the legal price. This will lead to a surplus of supply. When a price floor is implemented producers gain and consumers lose.

The forces of supply and demand tend to move the price toward the equilibrium price but when the market price hits the floor it can fall no further. If price floor is less than market equilibrium price then it has no impact on the economy. However price floor has some adverse effects on the market. But if price floor is set above market equilibrium price immediate supply surplus can be observed.

Must be set above the equilibrium price. If the floor is greater than the economic price the immediate result will be a supply surplus. At higher market price producers increase their supply. A price floor will only impact the market if it is greater than the free market equilibrium price.

Must be set above the price ceiling. To affect the market outcome the government must set a price floor that is above equilibrium price. However quantity demand will decrease because fewer people will be willing to pay the higher price. To affect the market outcome the government must set a price ceiling that is below equilibrium price.

A price floor is an established lower boundary on the price of a commodity in the market. Governments usually set up a price floor in order to ensure that the market price of a commodity does not fall below a level that would threaten the financial existence of producers of the commodity. The market price equals the price floor. A price floor creates.

In this case because the equilibrium price of is below the floor the price floor is a binding constraint on the market.