contestada

Suppose that the federal government places a binding price floor on chocolate. To help support the price floor, the government purchases all chocolate that consumers do not buy. If the price floor remains in place for a number of years, what do you expect to happen to the quantity of chocolate purchased by the government compared to the quantity of chocolate purchased by the government when the price floor is first imposed?

Respuesta :

reurisoneco

Answer:

The amount purchased by the government is expected to increase.

Explanation:

. The minimum price policy concerns the government's purchase of surplus production to stabilize the price of a product. In this case, when buying the surplus chocolate production, the government sets a minimum price, however, production increases because demand is artificially met, so producers have no reason to slow production as the government will buy the surplus. In this way, chocolate production is expected to increase, also increasing the surplus that the government will buy.