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Price floor

About Economics

QuestionAnswer
Price floor should be set higher/below the equilibrium price? Higher than the equilibrium price.
Shortage occurs or surplus occurs? Surplus occurs.
What will happen if there is an effective price floor? Price floor will be larger than the equilibrium price,surplus exists.
What will happen if there is an ineffective price floor? Price floor will be smaller than the equilibrium price,shortage exists.
Created by: Humaiya
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