Question

Suppose the United States maintains a price floor for spinach. This policy might decrease revenues for spinach farmers if the: multiple choice supply of spinach is inelastic. supply of spinach is elastic. demand for spinach is inelastic. demand for spinach is elastic.

Answer 1

Answer:

Demand for spinach is elastic.

Explanation:

The price floor, which is maintained by the United States, is the minimum price for selling the goods. This price is set above the equilibrium price, which results in excess supply while demand for the same goods remains constant.

Since the prices for spinach cannot be set lower than the price floor and the policy is decreasing the revenue output for spinach farmers then this probably means that the prices are set too high which has decreased the demand for spinach. This means that the demand for spinach is elastic.