Asked by Julian Jones on Jun 11, 2024
Verified
A binding price floor in the market for wheat:
A) increases the price paid by consumers.
B) decreases the price paid by consumers.
C) decreases the price received by farmers.
D) does not change the price received by farmers.
Binding Price Floor
A minimum price set by the government or regulatory body that is above the equilibrium price, causing a surplus in the market.
Wheat Market
A sector of the commodities market that deals with the trading of wheat products and its derivatives.
Price Paid
The sum of currency traded in return for a product or service.
- Cultivate an understanding of price floors and their implications on the equilibrium of markets.
- Evaluate the repercussions of official price support mechanisms in crop and livestock markets.
Verified Answer
AV
Antonio VecchioJun 12, 2024
Final Answer :
A
Explanation :
A binding price floor, set above the equilibrium price, increases the price paid by consumers because it legally mandates a minimum price that is higher than what the market would naturally set.
Learning Objectives
- Cultivate an understanding of price floors and their implications on the equilibrium of markets.
- Evaluate the repercussions of official price support mechanisms in crop and livestock markets.
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