Price Floor Surplus Removal in Wheat Market

Steps:

• At minimum price P (above equilibrium), quantity demanded falls to point L on demand curve.
• Quantity supplied rises to point R on supply curve, creating surplus LR.
• Surplus equals quantity supplied minus demanded (R minus L).
• Government buys surplus KR (equivalent to LR in diagram) to maintain P by absorbing excess supply.

Why B is correct:

• Price floor policy requires government purchase of surplus (Qs - Qd) to enforce minimum price and prevent market glut.

Why the others are wrong:

• A: KL is quantity demanded, not surplus; buying it doesn't address excess supply.
• C: Selling LR adds to surplus, driving price below P.
• D: Selling KR increases supply further, undermining price floor.

Final answer: B