Suppose the Government Does Not Provide an Incentive Payment to Producers

question 45

Multiple Choice

Suppose the government does not provide an incentive payment to producers under a production quota policy, and the amount that may be produced and sold by firms is limited by law in order to raise the market price to the support price. Do producers still gain surplus value under this version of the production quota policy?

• A) Yes, they would always achieve a larger producer surplus under this version of the policy.
• B) Yes, as long as the surplus value gained from consumers exceeds the amount of producer surplus lost from production quantities that are no longer produced.
• C) No, they would always face a decrease in producer surplus without the government incentive payment.
• D) No, the change in producer surplus is always negative due to the gains achieved by consumers.

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Definitions:

Perfectionistic Standards

Excessive self-demands in personal performance, often leading to stress and mental health issues.

Intrusive Thoughts

Unwanted thoughts or images that repeatedly enter a person's mind, causing distress or anxiety.

Contamination

The unintended presence of impurities or harmful substances in a material or environment, which may compromise the validity of an experiment or the health of individuals.

Maladaptiveness

A trait or behavior that is counterproductive to an individual's wellbeing or social functioning.