An effective price floor on wheat will:A) force otherwise profitable farmers out of business.B) result in a shortage of wheat.C) result in a surplus of wheat.D) clear the market for wheat.

Question

An effective price floor on wheat will:A)  force otherwise profitable farmers out of business.B)  result in a shortage of wheat.C)  result in a surplus of wheat.D)  clear the market for wheat.

Alberto Salmeron · Accepted Answer

Final Answer : C, Explanation :  An effective price floor on wheat will lead to an increase in price and decrease in demand. This will result in a surplus of wheat as producers will be incentivized to supply more wheat than consumers are willing to buy at the higher price.

An effective price floor on wheat will:

A) force otherwise profitable farmers out of business.
B) result in a shortage of wheat.
C) result in a surplus of wheat.
D) clear the market for wheat.

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