Question

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?a. Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.b. The number of farmers selling soybeans decreases.c. Consumers' income increases, and soybeans are a normal good.d. The number of consumers buying soybeans increases.

Answer 1

Answer:

The correct answer is - option A.

Explanation:

Price floor is a minimum price determined by the government at which a particular item can be sold. It is legal to sell the item on the minimum price which is often imposed by the government when farmers or sellers of the item convince that market price is not fair without a price floor.

In this case the farmers are farmers use improved, drought resistant seeds, which lowers the cost of growing soybeans which can transform the price floor.

Thus, the correct answer is - option A.