As a result of an agricultural price support,
A)quantity demanded is greater than quantity supplied.
B)quantity supplied is greater than quantity demanded.
C)fewer exchanges are made.
D)a and c
E)b and c

Question

Quizplus · Accepted Answer

Agricultural price supports create a price floor, which is higher than the market equilibrium price. This encourages farmers to produce more, resulting in an increase in quantity supplied, as seen in choice B. However, because the price is high, fewer consumers are willing to purchase the higher quantity supplied, resulting in a surplus of agricultural products or unsold inventories, leading to fewer exchanges or transactions, as seen in choice C. Therefore, the correct choice is E, which indicates that both B and C are true.

As a Result of an Agricultural Price Support