Question

What would be the impact of imposing a price floor below the equilibrium price?

Short answer

A cost ceiling is a legal highest cost, but the demand will determine the equilibrium price as lengthy as the latter is below the former. In other terms, a price floor below equilibrium intention has no impact.

Step-by-step solution

Concept introduction

The equilibrium price in any demand lives the expense at which the quantity mandated equals the amount provided.

Step 2:Example of Equilibrium price 

The equilibrium price in the market for bicycles is thus $\$500$per pound.

Using the supply formula,$Qs=x+yP$.