Which of the Following Is the Most Likely Explanation for the Imposition

question 79

Multiple Choice

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

• A) Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use.
• B) Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor.
• C) Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.
• D) Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

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Definitions:

Undercapitalized

A condition where a company does not have sufficient capital to conduct normal business operations effectively.

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods and services purchased on credit.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.

Cost of Trade Credit

The effective interest rate associated with taking discounts offered by suppliers for early payment or the cost of forgoing those discounts.