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:

Wage Rate

The amount of money paid to an employee for a specified quantity of work, usually expressed as an hourly rate or fixed salary.

Bureaucratic System

An organizational structure characterized by hierarchical authority, formal rules and procedures, and a clear division of labor, commonly found in large institutions and governments.

Rank And File

The ordinary members of an organization, such as a union or military force, as distinct from its leadership or officers.

Activism

Efforts to promote, impede, direct, or intervene in social, political, economic, or environmental reform with the desire to make changes in society.