Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price
A) create a shortage of agricultural products.
B) result in the quantity of these products supplied exceeding the quantity demanded at the floor price.
C) benefit taxpayers, who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price.
D) benefit consumers, who are willing and able to purchase more agricultural products at the floor price.

Question

Quizplus · Accepted Answer

Price floors set above the market clearing price cause a surplus because the quantity supplied exceeds the quantity demanded at that price. This does not create a shortage, benefit taxpayers, or necessarily benefit consumers, as they face higher prices.

Agriculture Price Supports That Establish a Price Floor at Which