(Figure: The Market for Spanish Textbooks) Use Figure: The Market for Spanish Textbooks. Suppose the government believes the producers of Spanish textbooks are not profitable, and it wants to make sure textbook producers are profitable. It could impose a control called a price _____, and for it to be binding, one possible price would be _____.
A) floor; $90
B) floor; $40
C) ceiling; $40
D) ceiling; $90

Question

(Figure: The Market for Spanish Textbooks) Use Figure: The Market for Spanish Textbooks. Suppose the government believes the producers of Spanish textbooks are not profitable, and it wants to make sure textbook producers are profitable. It could impose a control called a price _____, and for it to be binding, one possible price would be _____. 
A) floor; $90 
B) floor; $40 
C) ceiling; $40 
D) ceiling; $90

Quizplus · Accepted Answer

To ensure that producers of Spanish textbooks are profitable, the government can impose a price floor, which is a minimum price that must be charged for the product. Looking at the graph, a price floor set at $90 per textbook would be binding because it is above the equilibrium price of $70. This would increase the price that consumers pay and provide producers with a higher price, resulting in increased profitability for textbook producers. Therefore, the best choice is A.

(Figure: the Market for Spanish Textbooks) Use Figure: the Market