(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. If a price floor at P₄ is set to help improve farm incomes and the government wants to assure farmers that their output will be purchased, the government must purchase an amount of output equal to: A) Q₃ - Q₀. B) Q₃ - Q₁. C) Q₂ - Q₁. D) Q₁ - Q₃.

Question

Quizplus · Accepted Answer

The government must purchase an amount of output equal to Q3 - Q0 to assure farmers that their output will be purchased at the price floor of P4.

(Figure: Supply and Demand in Agriculture) Look at the Figure