Exhibit 4-11 Data on supply and demand
Bushels demandedper month
Price perbushel
Bushels suppliedper month
45
$5
77
50
4
73
56
3
68
61
2
61
67
1
57
Which of the following would occur if the government imposed a price floor (support price) of $4 per bushel in the wheat market shown in Exhibit 4-11?
A. Buyers would want to purchase more wheat than is supplied.
B. Buyers would not purchase all of the wheat grown.
C. Shortage of wheat would increase the price of wheat.
D. Farmers would grow less wheat.
Answer: B
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In the figure, the equilibrium price is initially $3 per bushel of wheat. If buyers come to expect that the price of a bushel of wheat will rise in the future, but sellers do not, the current equilibrium price will
A) rise. B) not change. C) fall. D) Perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.
A closed economy is one that
A) has no government sector. B) neither borrows from nor lends to foreign countries. C) produces mainly agricultural goods. D) produces mainly manufactured goods.
Why do decision makers tend to ignore external costs? How can internalizing external costs move us closer to efficient levels of output?
According to the text, all of the following are reasons for firms to merge except
a. to exercise greater market control b. to increase control over suppliers of their inputs c. to increase control over buyers of their products d. to diversify assets e. to form a cartel