-Refer to the above figure for the corn market. The government wants to set an effective price support in the corn market. To be effective the price should be set
A) below P1.
B) at P1.
C) at P2.
D) at P3.

Question

-Refer to the above figure for the corn market. The government wants to set an effective price support in the corn market. To be effective the price should be set
A) below P1. 
B) at P1. 
C) at P2. 
D) at P3.

Quizplus · Accepted Answer

An effective price support must be set above the equilibrium price (P1) to ensure that the price is higher than what the market would naturally set, thus P3 is the correct choice.

-Refer to the Above Figure for the Corn Market