Suppose the Government Decides to Create a Price Support (Floor)on

question 56

Multiple Choice

Suppose the government decides to create a price support (floor) on the price of corn, which of the following is a true statement?

• A)A binding price support/floor will tend to lower the price of corn for poorer people.
• B)If the government does not buy any wheat, there will tend to be an excess supply of wheat in the marketplace, if the price floor is binding.
• C)A non-binding price support/floor below the equilibrium price in the market will also lead to a rise in the price of corn.
• D)It is likely that the total surplus (consumer surplus plus producer surplus)will rise with a price support program.