Setting a price support in the market for sugar beets above equilibrium price ________ the quantity produced and ________ the quantity bought by consumers.
A) decreases; decreases
B) increases; decreases
C) decreases; increases
D) increases; increases
E) does not change; increases

Question

Quizplus · Accepted Answer

Setting a price support above equilibrium price would lead to an increase in the quantity produced, as producers would be incentivized to produce more at the higher price. However, it would decrease the quantity bought by consumers, as the higher price would deter some consumers from purchasing the more expensive sugar beets. Therefore, both the quantity produced and bought would be affected, but in opposite directions. Option B correctly reflects this.

Setting a Price Support in the Market for Sugar Beets