WAEC Economics 2018 Objective — Question 15
Question 15 of 50 from the West African Examinations Council (WAEC) Economics 2018 Objective paper, with the correct answer and a full explanation.
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A price floor is usually fixed
- A. at the equilibrium and causes shortage
- B. above the equilibrium and causes shortage
- C. below the equilibrium and causes shortage
- D. above the equilibrium and causes surplusesCorrect
Explanation
A price floor is set above the equilibrium price to guarantee a minimum price, which leads to excess supply (surpluses) since quantity supplied exceeds quantity demanded at that price.
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