As illustrated in the textbook, the government can further increase the support price of a commodity by purchasing excess supplies and using a:
A) production quota.
B) consumption tax.
C) excess profits tax.
D) minimum wage.

Question

Quizplus · Accepted Answer

The government can increase the support price of a commodity by implementing a production quota, which limits the quantity of the commodity that can be produced. However, this would likely result in shortages and higher prices for consumers. Instead, if the government purchases excess supplies at the higher support price, it will create additional market demand and support the higher price for producers. This approach also ensures availability of the commodity in the market without causing shortages or inflation.

As Illustrated in the Textbook, the Government Can Further Increase