An agricultural price support
A)will create a surplus in the relevant market,assuming the price support is above equilibrium price.
B)will create a shortage in the relevant market,assuming the price support is above equilibrium price.
C)is an example of a price floor.
D)will lead to greater total revenue for farmers if demand (for the product)farmers sell is inelastic between the equilibrium price and the price support (and assuming the price support is above equilibrium price).
E)a,c,and d

Question

Quizplus · Accepted Answer

Agricultural price support is a government policy designed to maintain or increase the market price of agricultural products above the equilibrium price. This leads to a surplus in the relevant market, assuming the price support is above equilibrium price. Therefore, option A is correct. Agricultural price support is an example of a price floor, which sets a minimum allowable price for a good or service above the equilibrium price. Thus, option C is also correct. In the event of the price support being above the equilibrium price, farmers experience greater total revenue if the demand for the product they are selling is inelastic. Therefore, option D is also correct. Hence, the correct answer is E.

An Agricultural Price Support