Question

what is the economic effect of price floors?
a. a black market will emerge.
b. shortages.
c. surpluses.
d. there are no economic effects.

Explanation:

A price floor is a minimum price set above the equilibrium price. At a price floor, the quantity supplied (by producers) is greater than the quantity demanded (by consumers). This excess supply leads to surpluses. A black market is more associated with price ceilings (where price is set below equilibrium, leading to shortages and black markets to get the good at a higher price than the ceiling). Shortages occur with price ceilings (not floors). And price floors do have economic effects, so option D is wrong.

Answer:

C. Surpluses.