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A floor is a border created by law that prevents any related quantities from exceeding it. Rent Control is a common example. When a floor is put into place, a surplus is created. If you draw a market graph, you will see that an "effective" price floor is set ABOVE the equilibrium. Draw a horizontal line across the entire graph and you'll then see that Quantity Supplied has increased and Quantity Demanded has decreased.

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16y ago

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