Suppose the Demand for Eggs Is Inelastic and That the Market-

question 44

Multiple Choice

Suppose the demand for eggs is inelastic and that the market- clearing price is $1.50 per dozen. Now suppose the government imposes a minimum price of $2.00 per dozen. Why might the government implement such a policy?

• A) to reduce excess supply in the egg market.
• B) to make consumers better off.
• C) to increase the incomes of egg farmers.
• D) to decrease tax revenues from egg farmers.
• E) to increase excess demand in the egg market.

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