Concept:A price floor is a minimum legal price set by the government to protect producers.
Explanation:A price floor is effective only when it is fixed
above the equilibrium price.
At such a high price, quantity supplied becomes greater than quantity demanded.
This excess of supply over demand creates a
surplus in the market.
If the price floor were set below equilibrium, it would have no effect because the market price would naturally stay above it.
Therefore, a price floor above equilibrium causes surpluses, not shortages.
Answer:D. above the equilibrium and causes surpluses.