Exhibit 39-2 -Refer to Exhibit 39-2.If P₁ is a price support,the cost of the price support program to the government is A)P₁ x Q₂. B)P₁ x (Q₂ - Q₀). C)P₁ x (Q₀ - Q₁). D)P₁ x (Q₂ - Q₁). E)none of the above

Question

Quizplus · Accepted Answer

According to the exhibit, P₁ is the price support per unit, Q₂ is the quantity demanded and Q₁ is the quantity supplied. The cost of the price support program to the government is the difference between the market price and the price support multiplied by the quantity supplied with the price support. Therefore, the correct formula is P₁ x (Q₂ - Q₁), which is choice D.

Exhibit 39-2 -Refer to Exhibit 39-2.If P1 Is a Price Support,the Cost

Exhibit 39-2 -Refer to Exhibit 39-2.If P₁ Is a Price Support,the Cost