ACCA BT · Chapter 3 · Question 6 of 11
A government sets a legal minimum price for a product above the market equilibrium price. What is the most likely result?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A surplus, because quantity supplied exceeds quantity demanded
Explanation
A minimum price set above equilibrium raises the price, which reduces quantity demanded and increases quantity supplied, so a surplus arises. A shortage would result from a maximum price set below equilibrium. A minimum price below equilibrium would have no effect, but here it is above equilibrium.
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