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WAEC Economics 2018 Question 15

Question 15

Price Determination

A price floor is usually fixed

  1. A.at the equilibrium and causes no shortage.
  2. B.above the equilibrium and causes shortage.
  3. C.below the equilibrium and causes surpluses.
  4. D.above the equilibrium and causes surpluses.
Show the answer and explanation

Answer: D (above the equilibrium and causes surpluses.)

Explanation

A minimum price above equilibrium makes supply exceed demand.