Question

Uppose a price floor on sparkling wine is proposed by the Health Minister of the country ofVinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?
A) Quantity demanded will decrease, quantity supplied will increase, and a shortage will result.
B) Quantity demanded will increase, quantity supplied will decrease, and a surplus will result.
C) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.
D) Quantity demanded will increase, quantity supplied will decrease, and a shortage will result.

Answer 1

Answer:

C) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result

Explanation:

Price floor is the least amount a good or service can be sold. A price floor is usually set above equilibrium price.

When a price floor is enacted, it usually discourages demand because prices are usually set higher and encourages supply.

As a result, quantity demanded will decrease, quantity supplied will increase, and a surplus will result.

I hope my answer helps you.