Question

Victor is a senator from Kansas who wants to help farmers. He has worked to encourage the passage of a law that would impose a binding price floor on wheat. What would he expect his critics to say? A. The binding price floor will encourage consumers to eat too much wheat. B. The binding price floor will cause a surplus of wheat that farmers will be unable to sell. C. The binding price floor will discourage farmers from planting wheat and they will plant other crops instead. D. The binding price floor will discourage farmers from using the most productive farming methods available. E. The binding price floor will cause a shortage of wheat.

Answer 1

Answer:

B. The binding price floor will cause a surplus of wheat that farmers will be unable to sell.

Explanation:

A binding price floor is a minimum price that is above the equilibrium price.

Because the price is higher than equilibrium price, quantity supplied from farmers will be higher than quantity demanded from buyers, causing a surplus of wheat.