
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772 Exercise 41
Suppose that you are the economic advisor to a local government that has to deal with a politically embarrassing surplus that was caused by a price floor that the government recently imposed. Your first suggestion is to get rid of the price floor, but the politicians don't want to do that. Instead, they present you with the following list of options that they hope will get rid of the surplus while keeping the price floor. Identify each one as either could work or can't work.
a. Restricting supply.
b. Decreasing demand.
c. Purchasing the surplus at the floor price.
a. Restricting supply.
b. Decreasing demand.
c. Purchasing the surplus at the floor price.
Explanation
a) The price floor imposed causes a surp...
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
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