Suppose the Equilibrium Price of Carrots Is $1

question 250

Multiple Choice

Suppose the equilibrium price of carrots is $1. The price floor instituted by the government is $1.50. Based on this information, which scenario would you expect to take place in the market?

• A) There would be a surplus of carrots.
• B) There would be a shortage of carrots.
• C) Farmers would switch from growing carrots to growing potatoes.
• D) The price floor would have no impact on the market because it is higher than the equilibrium price.