Question

[04.02 MC] A supply and demand graph, showing quantity on the x axis from 0 to 60 in 10 unit increments. Price is on yaxis from 0 to 5 in Public Domain The government sets the price of subsidized corn too low. Which of the following statements describes the result? (5 points) At that price, quantity demanded exceeds quantity supplied. At that price, quantity demanded equals quantity supplied. At that price, quantity demanded is lower than quantity supplied. At that price, quantity demanded and quantity supplied reach a price floor.

Answer 1

Setting the price of subsidized corn too low leads to a situation where quantity demanded exceeds quantity supplied, resulting in a shortage, as per the law of demand.

Step-by-step explanation:

When the government sets the price of subsidized corn too low, the result is a condition where the quantity demanded exceeds quantity supplied. This outcome is due to the principle known as the law of demand, which states that consumers will demand more of a good as its price decreases. Since the government-set price is below the market equilibrium price, where quantity demanded equals quantity supplied, there will be a shortage, or excess demand, as consumers want to purchase more corn than what is being supplied at that artificially low price. It creates a situation where the demand for corn exceeds the available supply. This leads to shortages as consumers are willing to buy more corn at the low price, but there is not enough supply to meet their demand.

Answer 2

The statement that describes the result is At that price, quantity demanded exceeds quantity supplied. This is because the quantity of the demanded product from the consumer has higher range than the amount of supply from the market. This can results into shortage