Suppose that the free market equilibrium price of bourbon is $5.00 a bottle, and that the government sets a price floor of $6.00 a bottle on bourbon. The most likely result of this action is that: a. b. C. d. there will now be an excess supply of bourbon the market price of bourbon will remain at $5.00 a bottle. the demand curve for bourbon will shift outward. there will now be an excess demand for bourbon.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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3.
Suppose that the free market equilibrium price of bourbon is $5.00 a bottle, and
that the government sets a price floor of $6.00 a bottle on bourbon. The most
likely result of this action is that:
a.
b.
C.
d.
there will now be an excess supply of bourbon
the market price of bourbon will remain at $5.00 a bottle.
the demand curve for bourbon will shift outward.
there will now be an excess demand for bourbon.
Transcribed Image Text:3. Suppose that the free market equilibrium price of bourbon is $5.00 a bottle, and that the government sets a price floor of $6.00 a bottle on bourbon. The most likely result of this action is that: a. b. C. d. there will now be an excess supply of bourbon the market price of bourbon will remain at $5.00 a bottle. the demand curve for bourbon will shift outward. there will now be an excess demand for bourbon.
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Price floor is the minimum price that must be paid to producers.

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