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Government intervention

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Question 18

A government decides to intervene in an agricultural market by introducing a minimum price (price floor) at PminP_{\text{min}}Pmin​ and commits to purchasing any surplus production to support farmers' incomes.

Market with a minimum price

Based on the diagram, which of the following areas represents the total expenditure by the government to purchase the resulting surplus?

Area VWYXVWYXVWYX

Area PminVXOP_{\text{min}}VXOPmin​VXO

Area PminWYOP_{\text{min} }WYOPmin​WYO

Area VWXVWXVWX

Government intervention Questions

  1. A Level
  2. /Economics
  3. /Government intervention