Refer to Figure 29.2 for Farmer Smith with a price floor set above the market price. Assume the price support is located at the minimum point on the farmer's ATC curve. If this support is eliminated, all of the following will result except
A. The rate of return on invested capital will increase.
B. Farmers will begin to lose money as the price returns to equilibrium.
C. Fewer resources will be allocated to this market.
D. Some farmers will leave the industry.
Answer: A
Economics
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