Explain where, in relation to the market equilibrium price, a price floor is set in order to be successful. Historically, what has been the result of agricultural price supports? Why do governments legislate agricultural price supports?

Explain where, in relation to the market equilibrium price, a price floor is set in order to be successful. Historically, what has been the result of agricultural price supports? Why do governments legislate agricultural price supports?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 6MC

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Explain where, in relation to the market equilibrium price, a price floor is set in order to be successful. Historically, what has been the result of agricultural price supports? Why do governments legislate agricultural price supports?

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What is a government price floor? What is one benefit? What is one cost?
Consider a market that is perfectly competitive and has no externalities. Which, if any, of these government interventions would lead to deadweight loss from preventing surplus generating transactions from occuring? (a) A subsidy (b) A tax (c) A binding price floor (d) A binding price ceiling.
Asap In the case of a binding price ceiling, the price paid in the market will be: more than the free market equilibrium price. less than the free market equilibrium price. equal to the free market equilibrium price. unable to be compared with the free market equilibrium price.
Which of the following is a challenge of government setting a price floor? Which of the following is a challenge of government setting a price floor? Firms choosing to leave the market A risk of excess supply of the good A risk of excess demand for the good Prices falling below marginal cost
Suppose that the government has been supporting the price of corn. Its free market price is $2.50 per bushel, but the government has been setting a support price of $3.50 per bushel. Which of the following are ways that the government might try to reduce the size of the corn surplus? (Select one or more answers from the choices shown.) a. Decrease the support price. b. Institute an acreage allotment program. c. Decrease demand by taxing purchases of corn. d. Raise the support price.
Which of the following is NOT one of the consequences of a binding Price Ceiling? Select one: a. an illegal black market b. a shortage c. a surplus d. a decrease in the price of the good below its equilibrium price
Consider a minimum wage law -- a law where the government requires businesses pay at least a certain amount to workers. This is an example of a price ________; this kind of price control causes _______ when binding. floor; a surplus floor; a shortage ceiling; a shortage ceiling; a surplus
If a government price control was set a price of $2. Which kind of price control would it be? price ceiling price floor no price control can exist below the equilibrium
Select the correct answer. When looking at rent control a price ceiling typically impacts: Group of answer choices both supply and demand supply demand neither
Refer to Figure 6-7. Which of the following statements is not correct? a. A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a nonbinding price ceiling if market demand is Demand B. b. A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. c. A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. d. A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B
) Determine a scenario where government imposes a binding restriction on price (ceiling or floor).
Consider the following market. Demand is given by Qd= 5- P where Qd is the quantity demand and P is the price. Supply is given by Qs = P/2 where Qs is the quantity supplied. a. What is the market equilibrium quantity and price? b Calculate consumer, producer and total surplus c. Suppose the government imposes a price floor of P = 4. Calculate the consumer surplus, producer surplus, and deadweight loss.