The market for wheat is perfectly competitive with the typical market demand and supply curves. The government imposes a binding minimum price of wheat on the market. The government promises to buy any resulting excess supply of wheat. However, because they just keep it in a warehouse, the Marginal Benefit of any wheat the government buys is zero. With the minimum price and the government buying excess supply, Consumer Surplus _____ and Market Surplus _____. A. increases; says the same or increases. B. increases; increases. C. could increase or decrease; decreases. D. could increase or decrease; stays the same or increases. E. stays the same; decreases.
The market for wheat is perfectly competitive with the typical market demand and supply curves. The government imposes a binding minimum price of wheat on the market. The government promises to buy any resulting excess supply of wheat. However, because they just keep it in a warehouse, the Marginal Benefit of any wheat the government buys is zero. With the minimum price and the government buying excess supply, Consumer Surplus _____ and Market Surplus _____. A. increases; says the same or increases. B. increases; increases. C. could increase or decrease; decreases. D. could increase or decrease; stays the same or increases. E. stays the same; decreases.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 6PA
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The market for wheat is
The government imposes a binding minimum price of wheat on the market. The government promises to buy
any resulting
of any wheat the government buys is zero. With the minimum price and the government buying excess supply,
A. increases; says the same or increases.
B. increases; increases.
C. could increase or decrease; decreases.
D. could increase or decrease; stays the same or increases.
E. stays the same; decreases.
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