Use the Figure Below to Answer the Following Questions

question 66

Multiple Choice

Use the figure below to answer the following questions. Figure 3.5.1
-Initially,the demand curve for good A is D₂ in Figure 3.5.1.Suppose good B is a substitute for good A.If the price of B falls

• A)the price of A will rise.
• B)there will be a surplus of good A at P₂.
• C)the demand curve for good A will shift from D₂ to D₃.
• D)the equilibrium quantity of good A will increase.
• E)all of the above are true except B.

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Definitions:

Countercyclical Payments

Government payments to farmers that increase when market prices are low and decrease when market prices are high, to stabilize farmers' incomes.

Direct Payments

Direct payments are sums of money paid directly from one party to another, bypassing any intermediaries.

Marketing Loans

Loans provided to agricultural producers, allowing them to store their product for a later sale when market conditions may be more favorable.

Price Supports

Initiatives, often by governments, to maintain the market price of a commodity or product at a certain level by purchasing excess supply, providing subsidies, or setting minimum prices to benefit producers.