Select the correct answer. A price floor will usually shift: a. demand b. supply c. both d. neither Illustrate your answer with a diagram.

wed to fall below the set minimum price. This may lead to a surplus of the good or service, as consumers might be less willing to buy at the higher price. However, the demand curve itself remains unchanged. #tag_title# Impact on Supply #tag_content# Similar to demand, the price floor does not directly affect the supply curve either. The supply curve itself remains unchanged, but the imposition of a price floor may lead to an increase in the quantity supplied, as producers are encouraged to produce more due to the artificially higher price. #tag_title# Correct Answer and Diagram #tag_content# Based on the analysis above, the correct answer is: d. neither A price floor does not shift the demand or supply curves directly. Instead, it affects the equilibrium price and quantity in the market. Here's a diagram to illustrate the impact of a price floor: \( \text{Price} \begin{tikzpicture}[baseline=(current bounding box.center)] \draw[->] (0,0) -- (4.5,0) node[right] {Quantity}; \draw[->] (0,0) -- (0,4.5) node[above] {Price}; \draw[thick,blue,shorten >=0.45cm,shorten <=0.45cm] (0,4) -- (4,0) node[right] {Demand}; \draw[thick,red,shorten >=0.45cm,shorten <=0.45cm] (0,0) -- (4,4) node[right] {Supply}; \fill (2,2) circle[radius=0.1]; \draw[dashed] (0,2) node[left] {P1} -- (2,2); \draw[dashed] (2,0) node[below] {Q1} -- (2,2); \fill (1.5,2.5) circle[radius=0.1]; \draw[dashed] (0,2.5) node[left] {Price Floor} -- (1.5,2.5); \draw[dashed] (1.5,0) node[below] {Q2} -- (1.5,2.5); \end{tikzpicture} \) In the diagram, the blue line represents the demand curve, and the red line represents the supply curve. The price floor is set above the initial equilibrium price (P1). As a result, the quantity demanded decreases from Q1 to Q2, while the quantity supplied increases. However, the demand and supply curves themselves do not shift.