Answer;
Price floor
When the government sets a price for wheat that is above the equilibrium price, it is imposing a price floor.
Explanation;
- Price floors prevent a price from falling below a certain level. When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply.
- Price control occurs when the government laws regulate prices instead of letting market forces determine prices.
- Price ceilings prevent a price from rising above a certain level.
