-Refer to the above figure for the corn market. The government wants to set an effective price support in the corn market. To be effective the price should be set
A)below P₁.
B)at P₁.
C)at P₂.
D)at P₃.

Question

-Refer to the above figure for the corn market. The government wants to set an effective price support in the corn market. To be effective the price should be set
A)below P₁. 
B)at P₁. 
C)at P₂. 
D)at P₃.

Quizplus · Accepted Answer

An effective price support must be set above the equilibrium price (P₁) to ensure that the market price does not fall below the support level. P₃ is above P₁, making it an effective price support.

-Refer to the Above Figure for the Corn Market