-Figure 4-4 depicts a market in which the government has imposed a price floor of $5.00 per unit.To maintain the price floor,the government should
A) buy 200 units of the good
B) sell 200 units of the good
C) buy 700 units of the good
D) sell 700 units of the good
E) buy 500 units of the good

Question

-Figure 4-4 depicts a market in which the government has imposed a price floor of $5.00 per unit.To maintain the price floor,the government should
A) buy 200 units of the good 
B) sell 200 units of the good 
C) buy 700 units of the good 
D) sell 700 units of the good 
E) buy 500 units of the good

Quizplus · Accepted Answer

To maintain a price floor, the government must buy the surplus created when the price floor is above the equilibrium price. If the surplus is 200 units, the government should buy 200 units.

-Figure 4-4 Depicts a Market in Which the Government Has