A Price Support Leads to Inefficiency Because

question 180

Multiple Choice

A price support leads to inefficiency because

• A) output is more than the efficient, equilibrium quantity.
• B) the marginal benefit of the last unit produced is larger than the marginal cost.
• C) the price charged is less than the equilibrium price.
• D) producer surplus is less than consumer surplus.
• E) producers must pay a subsidy to the government.

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Definitions:

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