The price support program instituted by the government:
A)does not change the competitive equilibrium.
B)will lead to a price below the competitive equilibrium.
C)will result in a quantity supplied smaller than the equilibrium quantity.
D)will result in a quantity supplied larger than the equilibrium quantity.

Question

Quizplus · Accepted Answer

Price support programs typically set a minimum price for a product that is above the market equilibrium, leading to a surplus in quantity supplied as producers are incentivized to produce more than what would be produced at the market equilibrium price.

The Price Support Program Instituted by the Government