Use the following to answer questions . Exhibit: Supply and Demand in Agriculture -(Exhibit: Supply and Demand in Agriculture) If the government set an effective price floor at one of the prices shown on the vertical axis: A) Q₃ bushels of wheat would be supplied. B) with this much wheat on the market, the price would fall to P₁. C) the resulting shortage would be made up by the government out of its accumulated stocks. D) all of the above would be true.

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Quizplus · Accepted Answer

A price floor set above the equilibrium price leads to a surplus, not a shortage. Therefore, option C is incorrect. The price would not fall to P1 because the price floor prevents it from dropping below a certain level, making option B incorrect. Option A is correct because a price floor above equilibrium results in a higher quantity supplied, such as Q3.

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