Use the following figure to answer the following questions.

-If the government imposes a price floor on wheat at $5 and agrees to purchase any surpluses,how much will the government be forced to spend?
A) $15,000,000
B) $3,000,000
C) $10,000,000
D) $25,000,000
E) nothing because there would be no surplus

Question

Use the following figure to answer the following questions.
 
-If the government imposes a price floor on wheat at $5 and agrees to purchase any surpluses,how much will the government be forced to spend?
A) $15,000,000 
B) $3,000,000 
C) $10,000,000 
D) $25,000,000 
E) nothing because there would be no surplus

Quizplus · Accepted Answer

A price floor set above the equilibrium price creates a surplus because the quantity supplied exceeds the quantity demanded. The government's commitment to purchase any surplus at the price floor means it will incur costs associated with the excess supply. Without specific quantities, it's impossible to calculate the exact expenditure, but the correct choice is based on the premise of the question.

Use the Following Figure to Answer the Following Questions