If the government establishes a price floor for agricultural products,then

Question

Quizplus · Accepted Answer

A price floor is a minimum price set by the government for a particular product or service. This helps to support producers in that industry, including farmers, by guaranteeing them a certain price for their goods. However, if the price floor is established above the market equilibrium price, it can lead to a surplus of goods, as production remains high but demand decreases. This surplus must then be purchased by the government to avoid overproduction and waste, which can be costly. Therefore, the correct answer is D: the government will need to purchase the resulting surplus.

If the Government Establishes a Price Floor for Agricultural Products,then