What is the impact of a price floor on a market, and how does it result in deadweight loss as shown on the graph?

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2026-07-19 21:15

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A price floor is a minimum price set by the government above the equilibrium price in a market. This can lead to an excess supply of goods, known as deadweight loss, because the price is higher than what consumers are willing to pay and producers are willing to sell at. This results in inefficiency and reduced overall welfare in the market.

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