Of the Following Groups, Which Benefits Most from a Government

question 204

Multiple Choice

Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?

• A) consumers, who purchase more units of the product than they did before the price support program was implemented
• B) taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place
• C) producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues
• D) the government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program

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Definitions:

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