217k views
5 votes
What would happen in the apple market if the government set a minimum price of 5$ per apple? What might motivate such a policy?

User To
by
8.7k points

1 Answer

1 vote

Final answer:

Setting a minimum price of $5 per apple would create a price floor, leading to a surplus of apples. The policy may be motivated by the goal of supporting apple producers and ensuring their income is fair.

Step-by-step explanation:

If the government set a minimum price of $5 per apple in the market, it would create a price floor. A price floor is set above the equilibrium price, which is the price determined by supply and demand.

In this case, the minimum price of $5 per apple is likely higher than the equilibrium price, so it would lead to a surplus of apples as the quantity supplied exceeds the quantity demanded.

This policy might be motivated by the goal of supporting apple producers and ensuring they receive a fair income.

By setting a minimum price, the government aims to protect the producers from low market prices that may not cover their production costs or provide enough profit. It also helps to maintain a stable supply of apples in the market.

User FrankelStein
by
8.1k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.