Respuesta :
Answer: The answer is as follows:
Explanation:
Price floor refers to the minimum price a commodity can be sold at.
Binding price floor refers to the price that is set by the government above the equilibrium level. This is minimum price for selling the coffee.
Because of this binding price floor:
The quantity of coffee demanded by the consumers will decreases as it will be more expensive for some of the consumers because price floor is higher than the price at equilibrium. Consumers will demand at a point where binding price floor is equal to quantity demanded.
Whereas the quantity of coffee supplied increases with the binding price floor. As it will became more profitable for the firms because of higher prices. Thus, prices are above the equilibrium level so the producers are trying to supply more.
