Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?
A) Consumers, who purchase more units of the product than they did before the price support program was implemented
B) Taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place
C) Producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues
D) The government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program

Question

Quizplus · Accepted Answer

Producers benefit the most from a government price support program as they receive a higher price on the sale of each unit and can sell more units, thus generating higher revenues. Consumers may end up paying a higher price for the product, while taxpayers may have to bear the cost of the subsidy payments to producers. The government merely enforces the program and does not benefit directly from it.

Of the Following Groups, Which Benefits Most from a Government