Minimum Price Creates Surplus Above Equilibrium

Steps:

• Identify equilibrium where supply equals demand, typically at price OP below OM.
• At minimum price OM (above equilibrium), quantity supplied exceeds quantity demanded.
• This mismatch results in a surplus at OM.
• Prices above OM remain above equilibrium, continuing the surplus.

Why A is correct:

• In supply-demand law, prices above equilibrium lead to surplus, as producers supply more than consumers demand.

Why the others are wrong:

• B: At OM, surplus occurs, not shortage, since OM exceeds equilibrium.
• C: Government enforces minimum OM, preventing automatic drop to OP.
• D: OM binds above equilibrium, making it effective by causing surplus.

Final answer: A