Economics · Market Equilibrium
When the Minimum Support Price (MSP) announced by the government is fixed above the market-clearing equilibrium price, it leads to a situation of:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1An effective price floor resulting in excess supply✓
- 2An effective price ceiling resulting in excess supply
- 3An effective price floor resulting in excess demand
- 4An effective price ceiling resulting in excess demand
Correct answer
An effective price floor resulting in excess supply
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