What is the result of an agricultural support price established above the equilibrium price?
A) The market gravitates toward and remains in equilibrium.
B) There will be excess quantity supplied of the product involved.
C) There will be excess quantity demanded the product in this market.
D) Since the support price is set above the equilibrium price, it will have no impact on the market price.

Question

Quizplus · Accepted Answer

When an agricultural support price is established above the equilibrium price, it creates an excess quantity supplied of the product involved as producers are incentivized to produce more at the higher price. This excess supply can lead to surpluses and potentially government intervention to purchase and store the excess supply.

What Is the Result of an Agricultural Support Price Established