In an attempt to help turnip farmers, the nation of Burginville imposed a $\$ 3$ per pound price floor on turnips. Before the price floor, the price of turnips was $\$ 1$ per pound.

What of the following best describes a consequence of this price floor?
Choose 1 answer:

A The marginal benefit of the quantity sold will be less than the marginal cost of the quantity sold
(B) There will be a shortage of turnips
(c) All turnip farmers will definitely benefit

De) Sellers may sell above the price floor
(E) Fewer turnips get sold

Question

In an attempt to help turnip farmers, the nation of Burginville imposed a $\$ 3$ per pound price floor on turnips. Before the price floor, the price of turnips was $\$ 1$ per pound.

What of the following best describes a consequence of this price floor?
Choose 1 answer:

A The marginal benefit of the quantity sold will be less than the marginal cost of the quantity sold
(B) There will be a shortage of turnips
(c) All turnip farmers will definitely benefit

De) Sellers may sell above the price floor
(E) Fewer turnips get sold

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Price Floor: A price floor is a minimum price set by the government above the equilibrium price. ‖ ‖ b ⋮ Surplus Creation: At the price floor of $3 per pound, the quantity supplied of turnips will exceed the quantity demanded, creating a surplus. ‖ ‖ c ⋮ Marginal Benefit vs. Marginal Cost: The marginal benefit of the quantity sold will be less than the marginal cost of the quantity sold because the price floor is above the equilibrium price, leading to inefficiency. ‖ ∻Answer∻ ⚹ The marginal benefit of the quantity sold will be less than the marginal cost of the quantity sold ⚹ ∻Key Concept∻ ⚹ Price Floor ⚹ ∻Explanation∻ ⚹ A price floor set above the equilibrium price leads to a surplus, where the marginal benefit of the quantity sold is less than the marginal cost,◊How does the imposition of a price floor on turnips in Burginville affect the market equilibrium?⍭ Generate me a similar question◊⚹

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