A Price Floor of $23 Placed on the Market in the Graph

question 115

Multiple Choice

A price floor of $23 placed on the market in the graph shown:

• A) is binding, and causes a shortage.
• B) is non-binding, and does not affect the market.
• C) is binding, and causes a surplus.
• D) is non-binding, and does not prevent the market from reaching equilibrium.

---

Definitions:

More Elastic

A term describing demand that is highly responsive to changes in price.

Quantity Demanded

The specific amount of a good or service consumers are willing to buy at a given price during a specific period.

Elasticity Coefficient

A numerical measure of the responsiveness of the quantity demanded or supplied of a good to a change in one of its determinants, like price.

Same Elasticity

A condition where two or more products have identical responsiveness in quantity demanded or supplied when there is a change in price.