Which of the following is true of a price floor?
a. A price floor allows supply and demand to function effectively.
b. A price floor is set such that the price is not allowed to increase above a certain level.
c. A price floor is beneficial to buyers in a market.
d. A price floor usually creates a shortage of a good in a market.
e. A price floor is set such that the price is not allowed to decrease below a certain level.
e
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A price floor will be binding only if it is set
a. equal to the equilibrium price. b. above the equilibrium price. c. below the equilibrium price. d. either above or below the equilibrium price.