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How can a prolonged surplus be created by price controls? What kind?

User Sarena
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Final answer:

A prolonged surplus can be created by price controls when the government sets a price floor, leading to a surplus as the quantity supplied exceeds the quantity demanded.

Step-by-step explanation:

A prolonged surplus can be created by price controls when the government sets a price floor, which is a minimum price that must be charged for a good or service. This sets the price above the equilibrium price, leading to a surplus, as the quantity supplied exceeds the quantity demanded. For example, if the government sets a price floor for agricultural products, such as wheat, above the equilibrium price, farmers may produce more wheat than consumers are willing to buy, resulting in a surplus of wheat.

User Mdoyle
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