A country's government would like to raise the price of one its most important agricultural crops, coffee beans. Which of the following government programs will result in higher prices for coffee beans?

Question

Quizplus · Accepted Answer

All of the options listed would contribute to raising the price of coffee beans. An import quota (A) limits the quantity of coffee beans that can be imported, reducing supply. An acreage limitation program (B) reduces the amount of coffee beans produced domestically by incentivizing farmers to leave some of their land idle, also reducing supply. An import tariff (C) increases the cost of imported coffee beans, making them more expensive and potentially reducing their supply in the domestic market. All these measures reduce the overall supply of coffee beans in the market, which, according to the law of supply and demand, would lead to higher prices.

A Country's Government Would Like to Raise the Price of One