Question

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price floor of $250 per physical. As a result of the price floor, the

Answer 1

Answer: the quantity demanded of physicals decreases and the quantity of physicals doctors want to give increases.

Explanation:

Since the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price floor of $250 per physical, there will be a reduction in the quantity demanded of physicals decreases and the quantity of physicals doctors want to give increases.

This is because since the price is higher than the equilibrium price, the consumers will reduce their demand for the product while the suppliers will e willing to supply more in order to make more profit.