When the government implements a price support program:

Question

Quizplus · Accepted Answer

All of these occur as a result of a price support program.

A price support program is a government intervention in a market where the government sets a minimum price level for a commodity by buying up any excess supply that would push the price below the minimum level. This leads to the government buying up a lot of the good, for which it has little or no use. The goal of a price support program is to increase the market price of the good by ensuring that it does not fall below a certain level. However, this intervention can result in a deadweight loss that is larger than that created by a price floor, as it distorts the market by artificially keeping prices high, leading to inefficient allocation of resources.

When the Government Implements a Price Support Program