Which of the following is true regarding a price support set above the equilibrium price?
i.The price support increases the price consumers pay.
ii.The price support creates a deadweight loss.
iii.The price support decreases output.
A) i and ii
B) i and iii
C) iii only
D) i, ii, and iii
E) i only

Question

Quizplus · Accepted Answer

Price supports set above the equilibrium price increase the price consumers pay and create a deadweight loss by causing inefficiencies in the market. They do not necessarily decrease output; instead, they can lead to overproduction and surplus.

Which of the Following Is True Regarding a Price Support