How does a minimum price (floor price) affect the milk market?
Refer to the figure below. Which of the graphs best describes this minimum price on milk?

Question

BlackTom AI · Accepted Answer

A price floor set above the market equilibrium forces the market price to be higher than the free-market price, causing producers to supply more but consumers to buy less — i.e., a surplus (excess supply).

1) Relevant concepts
- Market equilibrium: intersection of demand (D) and supply (S) determines P0 and Q0.
- Price floor (minimum price): a legally enforced minimum price P1. If P1 > P0 it is binding; if P1 ≤ P0 it is non‑binding.
- At a binding floor: Qs(P1) > Qd(P1). The quantity actually sold equals the smaller of Qs and Qd (usually Qd), and the difference Qs − Qd is the surplus.

2) Step‑by‑step reasoning
- Start with the free‑market equilibrium price P0 and quantity Q0 at S ∩ D.
- Impose a floor price P1 where P1 > P0 (binding).
- Read off the supply curve at P1 to get quantity supplied Qs and read off the demand curve at P1 to get quantity demanded Qd.
- Because the supply curve slopes upward and the demand curve slopes downward, raising price reduces Qd and increases Qs. Therefore Qs > Qd at P1.
- The market cannot clear at Q0; the traded quantity is Qd (buyers’ quantity) and the remainder Qs − Qd is unsold surplus (often purchased or stored by policy, or wasted).

3) Simple algebraic illustration
Let linear demand Qd = a − bP and supply Qs = c + dP. At a floor P1,
Qd(P1) = a − bP1
Qs(P1) = c + dP1
Surplus = Qs − Qd = (c + dP1) − (a − bP1) = (c − a) + (b + d)P1, which is positive for a binding P1 sufficiently above P0.

4) Why answer C is correct
Graph C depicts a horizontal minimum price set above the equilibrium price and shows that at that higher price the quantity supplied (to the right) exceeds the equilibrium quantity while the quantity demanded is lower — illustrating excess supply (surplus). The vertical placement of Q1 to the right of Q0 matches the increase in quantity supplied relative to equilibrium, and the dashed lines show the reduced quantity demanded.

5) Why the other options are incorrect
- A and B either show a floor below equilibrium (non‑binding) or misplace P1 relative to P0, so they do not create the surplus effect.
- D reverses the quantities (shows a reduction in supply or an outcome inconsistent with a binding floor), so it does not represent the surplus caused by a binding minimum price.

Conclusion: The correct graph is C, consistent with the binding minimum price producing excess supply; this matches the provided answer C.

How does a minimum price (floor price) affect the milk market? Refer to the figure below. Which of the graphs best describes this minimum price on milk? 单项选择题

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