Asked by Michelle Kuruc on May 11, 2024

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What are the major economic effects on output, prices, and farmers' income from government price supports that set minimum prices for farm products?

Economic Effects

The impact of economic activities and policies on the overall condition of the economy, including effects on growth, inflation, and employment.

Government Price Supports

Programs or policies implemented by a government to maintain the market price of a good or service at a certain level.

Farmers' Income

The earnings obtained by farmers for their labor and investment in agricultural activities, which can fluctuate significantly due to market and environmental conditions.

  • Investigate the ramifications of government policies on the financial dynamics of agriculture, centering on price supports and subsidies.
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SH
Shreen HusseinMay 12, 2024
Final Answer :
The use of price floors or price supports has a number of economic effects. It (a)causes surplus production, (b)increases farmers' incomes, (c)causes higher consumer prices for farm products, (d)creates an overallocation of resources to agriculture, (e)obliges society to pay higher taxes to finance the purchase and storage of surplus output, (f)increases pollution because of the greater use of agrochemicals and vulnerable land, and (g)forces other nations to bear the costs associated with import barriers and depressed world agricultural prices.