Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
B β A β C β D
B
B β C β A β D
C
A β B β D β C
D
B β A β D β C
Understanding the Answer
Let's break down why this is correct
Answer
To analyze the effects of a price floor on the potato market, we first need to identify the equilibrium price before the price floor is set. This establishes a baseline for understanding how the price floor will impact the market. Next, we evaluate the impact on producer surplus, which helps us see how producers benefit from the higher price. After that, we assess changes in consumer behavior due to the higher prices, as consumers may buy less when prices rise. Finally, we observe the resulting surplus and any government intervention needed to manage the excess supply created by the price floor.
Detailed Explanation
First, we need to find the equilibrium price. Other options are incorrect because This option skips evaluating the equilibrium price first; This option starts with producer surplus, which comes later.
Key Concepts
Price Floors
Market Surplus
Government Intervention
Topic
Price Floors in Competitive Markets
Difficulty
medium level question
Cognitive Level
understand
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