Use the following to answer question(s): Supply and Demand in Agriculture

-(Exhibit: Supply and Demand in Agriculture) If the government set an effective price floor at one of the prices shown on the vertical axis:
A) Q₃ bushels of wheat would be supplied.
B) with this much wheat on the market, the price would fall to P₁.
C) the resulting shortage would be made up by the government out of its accumulated stocks.
D) all of the above would be true.

Question

Use the following to answer question(s): Supply and Demand in Agriculture
 
-(Exhibit: Supply and Demand in Agriculture) If the government set an effective price floor at one of the prices shown on the vertical axis:
A) Q₃ bushels of wheat would be supplied. 
B) with this much wheat on the market, the price would fall to P₁. 
C) the resulting shortage would be made up by the government out of its accumulated stocks. 
D) all of the above would be true.

Quizplus · Accepted Answer

A price floor set above the equilibrium price (not shown but implied) would result in a surplus, meaning producers would be willing to supply more than consumers are willing to buy at that price. Q₃ represents a quantity of wheat that producers would be willing to supply at a price above the equilibrium, which aligns with the concept of a price floor causing a surplus. Choices B and C describe scenarios related to price ceilings or market adjustments not directly related to the establishment of a price floor.

Use the Following to Answer Question(s): Supply and Demand in Agriculture