If an Agricultural Price Support Keeps a Price Above the Equilibrium

question 103

Multiple Choice

If an agricultural price support keeps a price above the equilibrium market price,

• A)Shortages of agricultural products will result.
• B)More resources will be devoted to agriculture than are optimal.
• C)There will be redistribution of income from the government to consumers.

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Definitions:

Minimum Wage Laws

Legislation that sets the lowest hourly wage rate that an employer can legally pay its employees.

Natural Rate

A theoretical concept referring to the equilibrium level of a variable, such as unemployment or interest, under normal economic conditions without short-term distortions.

Unemployment

A situation where individuals who are capable and willing to work are unable to find employment.

Unemployment Insurance

A government program that provides temporary financial assistance to eligible workers who have lost their jobs.