Business, 16.07.2021 20:20 NatsuDDW

Suppose the government regulates the price of a good to be no lower than some minimum level. Can such a minimum price make producers as a whole worseâ€‹ off? Explain. A. Yes. If producers produce more than consumers are willing toâ€‹ buy, the extra cost may exceed the gain in producer surplus. The extra cost is equal to the area under the supply curve between theâ€‹ market-clearing quantity and the quantity supplied. B. No. Although some producers may not be able to compete at the higherâ€‹ price, onâ€‹ net, producers as a whole will benefit from the higher minimum price. C. Yes. If producers produce more than consumers are willing toâ€‹ buy, the extra cost may exceed the gain in producer surplus. The extra cost is equal to the area under the supply curve between the quantity demanded and the quantity supplied. D. No. As long as the minimum price is above the current equilibriumâ€‹ price, producers as a whole will benefit from the price floor.

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Suppose the government regulates the price of a good to be no lower than some minimum level. Can suc...

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