Refer to Figure 6.4. Suppose that the market is currently in equilibrium and the government decides to impose a minimum price equal to price C in the graph. How will the equilibrium quantity and price change as a result of the price floor?
A. It won't. The price floor is above the equilibrium, so the market stays at equilibrium.
B. It will cause a shortage because at the price floor, the quantity demanded exceeds the quantity supplied.
C. It will cause a surplus because at the price floor, the quantity demanded is below the quantity supplied.
D. It won't. The price floor is below the equilibrium, so the market stays at equilibrium.
Answer: D
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