To keep the price at the level set by a price support,the government must
A) buy some of the good.
B) sell some of the good.
C) receive a subsidy from the producers.
D) insure that imports are readily available.
E) be careful to always set the price support below the equilibrium price.

Question

Quizplus · Accepted Answer

To keep the price at the level set by a price support, the government must buy some of the good. This creates an artificial increase in demand, which helps keep the price from falling below the support level. Without government purchases of the good, the price would likely fall, as producers would be forced to lower the price to clear the market.

To Keep the Price at the Level Set by a Price