Explain how a price floor set above the equilibrium market price ...

[Deast7027]

Explain how a price floor set above the equilibrium market price for a good can cause a surplus of that good.
 
  What will be an ideal response?

Question 2

Which of the following activities increases the demand for union labor?
 
  A) a decrease in the minimum wage
  B) a decrease in immigration
  C) an increase in the union wage
  D) an increased desire by consumers to buy imports

[vboyd24]

Answer to Question 1

At the market equilibrium price, the quantity demanded equals the quantity supplied. If a price floor is set above the equilibrium price, the price floor has two separate effects and both help create a surplus of the good. First, the higher price increases the quantity supplied. Second, the higher price decreases the quantity demanded. On both countsthe increase in the quantity supplied and the decrease in the quantity supplieda surplus is created.

Answer to Question 2

B

[Deast7027]

Thanks for the timely response, appreciate it

[at]

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