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4 2 Government Intervention in Market Prices: Price Floors and Price Ceilings Principles of Economics

The result is a quantity supplied in excess of the quantity demanded (Qd). When quantity supplied exceeds quantity demanded, a surplus exists. Figure 3.22 illustrates the effects of a government program that assures a price above the equilibrium by focusing on the market for wheat in Europe. However, policies to keep prices high for farmers …

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