The market for an agricultural crop has an effective price floor. Then poor weather causes the market supply to decrease. What impact does this have on the effectiveness of the price floor in the market, ceteris paribus?
A) The effectiveness of the price floor will be reduced.
B) The effectiveness of the price floor will be increased.
C) There will be no impact on the effectiveness of the price floor.
D) There is no basis for predicting how the change in supply will impact the effectiveness of the price floor.
Correct Answer:
Verified
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