Asked by Dennis Addai Asubonteng on Jun 17, 2024
Verified
Which of the following statements is correct?
A) The price support program hastened the exodus of resources from agriculture.
B) The main beneficiaries of government price support assistance were the very low income farmers.
C) If the demand for agricultural products is inelastic, a relatively small decrease in supply will increase gross farm incomes.
D) There is a misallocation of resources in rural America because of absolute and relative increases in the size of the farm population.
Price Support
Government or regulatory interventions to maintain the price of a commodity at a certain level to protect producers from market fluctuations.
Gross Farm Incomes
The total revenue produced from farming activities before deducting any expenses.
Agricultural Products
Goods produced through farming and agriculture, including crops, livestock, and other raw materials used for food, fuel, and other purposes.
- Acquire knowledge about the variability of demand within the agricultural sector and how it affects the income of farmers and market prices.
- Understand the interaction between domestic and international agricultural policies and their consequences on trade, prices, and production capacities.
Verified Answer
SS
Shelia SessionJun 17, 2024
Final Answer :
C
Explanation :
C is correct because when demand is inelastic, consumers are relatively unresponsive to price changes. Therefore, a small decrease in supply can lead to a significant increase in prices, which in turn can increase gross farm incomes, assuming the price increase more than offsets the decrease in quantity sold.
Learning Objectives
- Acquire knowledge about the variability of demand within the agricultural sector and how it affects the income of farmers and market prices.
- Understand the interaction between domestic and international agricultural policies and their consequences on trade, prices, and production capacities.