An increase in the level of government price supports for wheat will not make wheat farming more profitable because
A) by definition government actions cannot affect profits.
B) it raises the cost of growing wheat as well as the revenue.
C) profit is the consequence of certainty and government policies are inherently uncertain.
D) the demand for wheat is inelastic.
E) wheat farmers are price takers, not price searchers.
B
You might also like to view...
Which of the following is a situation that makes the market behave inefficiently?
a) when consumers do not have enough information to make good choices b) when the producers have the power to find out exactly what to produce c) when both consumers and producers are fully informed about a product d) when the market is in perfect competition and prices are high
Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the area representing consumer surplus after the imposition of the price floor?
A) A + B + D B) B + C + D + E C) A D) C + E