Question

For the given market demand qd=280−4p and market supply qs=2p+40, which legally imposed price would constitute a binding price floor?

A) $50
B) $60
C) $70
D) $80

Answer 1

A binding price floor cannot be represented by any of the given options.

Step-by-step explanation:

Binding Price Floor

In order to determine which price would constitute a binding price floor, we need to find the price at which the quantity supplied is greater than the quantity demanded.

Setting the demand and supply equations equal to each other:

280 - 4p = 2p + 40

Simplifying and solving for p:

6p = 240

p = 40

Therefore, the legally imposed price that would constitute a binding price floor is $40. None of the given options - $50, $60, $70, or $80 - would be considered a binding price floor.