Suppose the market equilibrium price of wheat is $5 per bushel, and the government sets a price floor of $7 per bushel to aid growers. What is the most likely result of this action?
a. There will be a shortage of wheat.
b. There will be a surplus of wheat.
c. There will be an increase in the quantity of wheat demanded as the result of the price floor.
d. There will be a decrease in the quantity of wheat supplied as the result of the price floor.
B
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The "underground economy" refers to
A) the formal sector of the economy in developing countries. B) the production of goods and services used by the government for covert spy operations. C) the sector of the economy that earns profits that are higher than average. D) the buying and selling of goods that is concealed from the government.
Which of the following statements about the perfect competitor is INCORRECT?
A) The perfectly competitive firm is always a price taker. B) The perfect competitor sells a homogeneous commodity. C) If an individual firm raises price, it will lose business. D) The products made by a perfectly competitive firm have no close substitutes.