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Question
When the government intervenes in the functioning of the market to protect the interest of the farmers by fixing the floor price (minimum support price) at which the traders have to buy the food-grains from them, the price is fixed at the level of ______.
Options
equal to equilibrium price
higher than the equilibrium price
lower than the equilibrium price
it does not matter at what level
MCQ
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Solution
When the government intervenes in the functioning of the market to protect the interest of the farmers by fixing the floor price (minimum support price) at which the traders have to buy the food-grains from them, the price is fixed at the level of higher than the equilibrium price.
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