Minimum Price. A minimum price is a price floor, the market price cannot fall below it.
A minimum price causes price to rise to P’, quantity demanded to fall to Qd and quantity supplied to rise to Qs. Resultantly there is excess supply Qs – Qd.
Minimum Price. A minimum price is a price floor, the market price cannot fall below it.
A minimum price causes price to rise to P’, quantity demanded to fall to Qd and quantity supplied to rise to Qs. Resultantly there is excess supply Qs – Qd.