If the Federal Government Sets a Minimum Price for Wheat

question 375

Multiple Choice

If the federal government sets a minimum price for wheat at $5.00 per bushel when the equilibrium price is $4.50, then

• A) a surplus will be created causing the price to fall to the equilibrium price of $4.50.
• B) a permanent surplus will develop because the government established the minimum price at $5.00.
• C) a shortage will be created causing the price to rise to the equilibrium price of $4.50.
• D) a permanent shortage will develop because the government established the minimum price at $5.00.

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Definitions:

Government Regulation

Regulations enforced by the government to control the way businesses and industries can operate, often to protect public health, safety, and welfare.

Fertility Rate

The average number of children born to a woman over her lifetime in a given population.

Replacement Rate

Replacement rate is a demographic term describing the number of births needed per woman to maintain a population's size over time, typically considered to be approximately 2.1 children per woman in developed countries.

Economically Advanced Nations

Countries with highly developed economies, characterized by high per capita income, diversified industries, and advanced technological infrastructure.