Respuesta :
Answer:
A. The quantity demanded for bread will decrease , quantity supplied will increase
Explanation:
PRICE FLOOR is the minimum mandated price set by government , usually above equilibrium price , to ensure producers' protection (if market price is perceived to be low) . EG : Minimum Support Price for agricultural products to protect farmers .
However at this raised price : There is Excess Supply , as Quantity Supplied increases with price increase (law of supply - price & supply direct relationship) , Quantity Demanded falls (law of demand - price & demand inverse relationship)
Based on the information given, the result of the price floor set by the government will be A. The quantity demanded for bread will decrease, and the quantity supplied will increase.
What is a price floor?
It should be noted that a price floor simply means a government imposed price control on how low a price can be charged for a commodity, or service.
A price floor must be higher than the equilibrium price in order for it to be effective. In this case, the government has set a price floor on bread and hence, the manufacturers can’t sell loaves for less than $5.00, which is a dollar above the market price.
Since it's above the market price, there'll be a reduction in the quantity demanded due to the increase in price while the supplier will supply more breads.
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