Question

Governments often set price floors in an effort to protect _____.

A. Consumers from high prices.
B. The environment from exploitation.
C. Small businesses from monopolies.
D. Producers from low market prices.

Answer 1

Price floors are set by governments to protect producers from low market prices. They ensure a fair and sustainable price for goods or services, such as agricultural products, to support producers and maintain a stable market.

Step-by-step explanation:

Price Floors and Government Intervention in Markets

Price floors are often set by governments in an effort to protect producers from low market prices. A price floor is a minimum price that is set above the equilibrium price, which is the price at which supply and demand are balanced in a free market. By implementing a price floor, the government ensures that producers receive a fair and sustainable price for their goods or services.

For example, the government may set a price floor for agricultural products to support farmers and prevent them from selling their produce at very low prices. This provides them with financial stability and encourages them to continue producing food for the country.

Overall, price floors are intended to protect producers and maintain a stable market for goods and services.