Suppose the farmers are unable to sell their total output of wheat at a price which si fixed by the government higher than the equilibrium price what policy is adopted by the government?
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When the governments place a particular price for wheat that is higher than the equilibrium price, it means that it is imposing a Price Floor.
Price Floor is the term which is used to notate the government imposed price control. The price control decides how low a product could be charged.
According to experts, a 'price floor' must be 'higher' than the 'equilibrium price' to be more effective for the seller (Farmer).
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