A price support system that raises price above the normal equilibrium will cause

Question

Quizplus · Accepted Answer

When a price support system raises prices above the normal equilibrium level, it creates a situation where the price is artificially high. This means that consumers will be less likely to purchase the good or service at the higher price, resulting in a decrease in the quantity demanded (option A). Since the price is artificially high, producers will be incentivized to produce more of the good, leading to an increase in the quantity supplied (eliminating option D). There is no reason to believe that a price support system would cause a shift in supply (eliminating option B) or demand (eliminating option C).

A Price Support System That Raises Price Above the Normal