The USGovernment Restricts the Production of Peanuts by Limiting Production Licenses

question 49

Multiple Choice

The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports, the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

• A)price ceiling.
• B)price floor.
• C)opportunity cost.
• D)shortage.
• E)efficiency move.

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Definitions:

Quantity Demanded

The overall volume of a good or service that customers are ready and financially able to acquire at a certain price point.

Price Floor

A government-imposed minimum price charged for a commodity, intended to ensure fair conditions for producers.

Equilibrium Price

Equilibrium price refers to the price point in the market where the amount of goods provided matches the amount of goods consumers want to buy.

Rent Control

Government-imposed limits on the amount landlords can charge for leasing residential properties, intended to make housing affordable.