Question:
Which one of the following is not a problem associated with the imposition of effective price floors on farm products?
(1) chronic excess supply in the market
(2) the transfer of income from non-agricultural taxpayers to farmers
(3) large subsidies paid by the government
(4) a higher price for consumers
(5) the emergence of black markets for agricultural commodities
Correct Answer:
(5)
Answer Explanation:
Effective price floors (minimum prices) are set above equilibrium, causing persistent surpluses (excess supply), requiring government bailouts, and forcing consumers to pay higher prices. Black markets (illegal selling at higher prices) are associated with price ceilings (shortages), not price floors.
Topic: Price Controls Year: 2020
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