A binding minimum price set above the equilibrium price in a market generally creates:
Correct answer: A. A surplus of the product
- A. A surplus of the product
- B. A shortage of the product
- C. A fall in the legal minimum price
- D. An unchanged quantity supplied and demanded
Explanation
At a price above equilibrium, sellers want to supply more than buyers want to purchase. The difference between quantity supplied and quantity demanded is a surplus.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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