Question

The current price in the market for milk is $8.00 If the government imposed a price floor of $4.00 in this market total surplus would ____________.

Answer 1

not change

Step-by-step explanation:

A price floor is the minimum price that a commodity can be sold at. Since the imposed a price floor of $4.00 is below the current price for milk of $8.00, supplies will be indifferent to the imposition of the price floor. However, if the imposed price floor was $10.00, the total market surplus would increase as suppliers would be motivated to supply more milk to generate higher profits.