When a price support is set above the equilibrium price,producers ________ the quantity supplied and consumers ________ the quantity demanded.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) do not change; do not change

Question

Quizplus · Accepted Answer

When the price support is set above the equilibrium price, producers have an incentive to increase the quantity supplied as they can sell their products at a higher price. On the other hand, consumers tend to reduce the quantity demanded as the higher price makes the product less affordable or attractive. Therefore, the correct answer is B: producers increase the quantity supplied and consumers decrease the quantity demanded.

When a Price Support Is Set Above the Equilibrium Price,producers