Suppose the government regulates the price of a good to be no lower than some minimum level. Can such a minimum price make producers as a whole worse​ off? Explain. A. Yes. If producers produce more than consumers are willing to​ buy, the extra cost may exceed the gain in producer surplus. The extra cost is equal to the area under the supply curve between the​ market-clearing quantity and the quantity supplied. B. No. Although some producers may not be able to compete at the higher​ price, on​ net, producers as a whole will benefit from the higher minimum price. C. Yes. If producers produce more than consumers are willing to​ buy, the extra cost may exceed the gain in producer surplus. The extra cost is equal to the area under the supply curve between the quantity demanded and the quantity supplied. D. No. As long as the minimum price is above the current equilibrium​ price, producers as a whole will benefit from the price floor.
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Suppose the government regulates the price of a good to be no lower than some minimum level. Can suc...
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