When the Government Institutes a Target Price

question 99

Multiple Choice

When the government institutes a target price,

• A)a surplus is created.
• B)consumers must pay the target price.
• C)the farmer receives a deficiency payment if the market price is below the target price.
• D)the farmer receives a deficiency payment if the market price is above the target price.
• E)all of the above

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Definitions:

Rules Of The Game

The laws, customs, manners, conventions, and other institutional elements that determine transaction costs and thereby affect people’s incentive to undertake production and exchange.

Tax Laws

The legal standards and regulations governing the collection of taxes by the government from individuals and organizations.

Property Rights

The legal rights to use, control, and derive benefits from a property or resource, including the right to exclude others from doing so.

Production Possibilities Frontier (PPF)

A curve depicting all maximum output possibilities for two or more goods given a set of inputs, representing the trade-offs of choosing one good over another.