Price floors,such as government price support programs,_____.
A)decrease consumption
B)increase production
C)decrease production
D)a and b
E)a and c

Question

Quizplus · Accepted Answer

Price floors, such as government price support programs, are designed to ensure that producers receive a minimum price that is often above the market equilibrium. This encourages increased production because producers are guaranteed a higher price for their goods. At the same time, because the price is above the equilibrium, it decreases consumption since consumers are less willing to buy the product at the higher price.

Price Floors,such as Government Price Support Programs,_____