From 2005 to 2007, the European Union experienced "wine lakes," a surplus of wine brought about by government policies that encouraged overproduction. Which policy would result in a surplus of wine?

Question

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A price floor is a government policy that sets a minimum price for a good or service, often above the equilibrium price. When set above the equilibrium price of wine, it encourages overproduction by providing a financial incentive for producers to continue making more wine than there is demand for. This leads to a surplus or "wine lake."

From 2005 to 2007, the European Union Experienced "Wine Lakes