Use data in the following table to explain the economic effects of a price floor at $8, at $9, and at $10. Explain the economic effects

A price floor means that the price is not allowed to fall below a minimum price set by government. If the price floor is above the competitive equilibrium price of $7, a surplus of the product would result. If the price floor was set at $8, the quantity demanded would be 4000 units but the quantity supplied would be 5500 units for a surplus of 1500 units. At a price floor of $9, the surplus would be 3000 units, and with a price floor of $10, the surplus would be 4500 units. A price floor interferes with the rationing function of price that serves to balance the decisions of suppliers and salamanders. The price floor that produces a surplus indicates that resources are being over allocated and that there is economic inefficiency; output is being produced which consumers do not want to purchase at the price floor.