Answered

Westonci.ca is the premier destination for reliable answers to your questions, brought to you by a community of experts. Get detailed and accurate answers to your questions from a community of experts on our comprehensive Q&A platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

The government has decided that the free market price of cheese is too low. Farmers complain that the price floor has reduced their total revenue.Is this possible? Explain

Sagot :

Revenue is the product of price times volume (R = P * V). The problem for the farmers is that because the price of cheese (P) went up, demand for it (V) went down. Essentially, the government raised prices to a level higher than what many people wanted to pay. The farmers made more money with lower prices because they sold a lot of cheese (a high volume, in the terminology of the formula). The potential for these artificial imbalances is why markets are generally more effective than governments at setting prices.
Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.