Question

Suppose the federal government provides wheat farmers with a price floor above the market equilibrium price of wheat, creating a surplus. Which of the following causes a reduction in the surplus of wheat?

a. A decrease in the market equilibrium price of wheat
b. A decrease in the demand for wheat
c. An increase in the supply of wheat
d. Elimination of the price floor

Answer 1

D. Elimination of the price floor

Step-by-step explanation:

A lowered priced goods facilitates increased quantity demanded but a decreased quantity of a specific goods/product supplied brings about reduction in surplus.