The federal government often aids farmers through systems of price supports. Suppose that the government sets a price support of S6 per pound in the rice market. The graph on the right shows this situation The price of rice would be $ 5 per pound if there was no price support. In order to maintain the price support, the government will have to purchase 200 pounds of rice The cost of this program to the government is s D E300 400 500 Quantity of rice Price of rice
The federal government often aids farmers through systems of price supports. Suppose that the government sets a price support of S6 per pound in the rice market. The graph on the right shows this situation The price of rice would be $ 5 per pound if there was no price support. In order to maintain the price support, the government will have to purchase 200 pounds of rice The cost of this program to the government is s D E300 400 500 Quantity of rice Price of rice
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 7PA
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The price supports are set by the government of a nation. It is the minimum legal price at which a seller may sell the good to the consumer. The price cannot drop below the set price floor.
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