The following image shows a market. If the government wants to make a floor price of $3 persist in the market, it should _____.
Figure 16.4

Question

The following image shows a market. If the government wants to make a floor price of $3 persist in the market, it should _____.​ ​
Figure 16.4
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Quizplus · Accepted Answer

By purchasing 300 units of the product at $3 per unit at each period, the government can create a floor price of $3 in the market. This is because if the market price drops below $3, the government can enter the market and purchase the product at $3, increasing demand and preventing the price from dropping further. By doing this consistently, the government can ensure that the floor price of $3 persists in the market.

The Following Image Shows a Market