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Consider the market for tart cherries. (Of which Michigan is far and away the top producer!) In a bid to ensure that farmers can sustain
Consider the market for tart cherries. (Of which Michigan is far and away the top producer!) In a bid to ensure that farmers can sustain their businesses in Michigan (and other states), the Federal Government imposes a binding price floor on the price of tart cherries. In what situation might this price floor harm producer (farmer) surplus overall? (a) All situations. I.e., producer surplus will always fall with this binding price floor in place. (b) No situations. I.e., producer surplus will always rise with this binding price floor in place. (c) If demand for tart cherries is sufficiently elastic. (d) If supply of tart cherries is sufficiently inelastic
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