Suppose that Canada and the European Union impose price floors on many similar agricultural products.These price floors lead to unwanted surpluses.To deal with a surplus:
A) the Canadian government typically pays farmers to produce as much as possible.
B) the Canadian government in some cases has destroyed the surplus production.
C) the European Union pays farm exporters to sell products for a profit overseas.
D) the Canadian government holds auctions to sell the surplus to the highest bidder.

Question

Quizplus · Accepted Answer

Paying farmers or exporting to other countries can ultimately lead to the creation of more surplus. Holding auctions may not bring in enough revenue to cover the cost of production. Destroying the surplus may be the most effective solution as it reduces supply and prevents further price decreases.

Suppose That Canada and the European Union Impose Price Floors