How much of a market surplus would exist if the government set a price floor of $5 per gallon?

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asked Jul 15, 2018 169k views

1 Answer

Rowinson Gallego · Answer 1 · 2018-07-19T23:59:50+0000

If milk were set at $5 per gallon, market surplus would likely increase since this is higher than the current average price. If oil were set at $5 per gallon, market surplus would decrease dramatically. The laws of supply and demand suggest that an 80% discount will increase demand.

How much of a market surplus would exist if the government set a price floor of $5 per gallon?

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