Demand prices exceeds supply prices

When only Q0 papayas reached the market in that case: (1) desperate buyers would be willing to pay only P1 per papaya. (2) production costs would exceed P2 per papaya. (3) buyers would be indifferent regarding getting additional papaya. (4) the papaya surplus would generate widespread famine. (5) demand prices for papayas would exceed supply prices.

1827_example of Price Floors.png

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