Suppose the demand for eggs is inelastic and that the market- clearing price is $1.50 per dozen. Now suppose the government imposes a minimum price of $2.00 per dozen. Why might the government implement such a policy?
A) to reduce excess supply in the egg market.
B) to make consumers better off.
C) to increase the incomes of egg farmers.
D) to decrease tax revenues from egg farmers.
E) to increase excess demand in the egg market.
Correct Answer:
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