The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports, the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.This program has the same effect as a
A)price ceiling.
B)price floor.
C)opportunity cost.
D)shortage.
E)efficiency move.

Question

Quizplus · Accepted Answer

The government's restriction on peanut production and prohibition of imports results in prices being set above the market equilibrium level, which is the definition of a price floor.

The USGovernment Restricts the Production of Peanuts by Limiting Production Licenses