Asked by Rebekah Turner on Jul 21, 2024
Verified
Because the demand for agricultural products is price-inelastic, price support programs tend to
A) increase farm income.
B) decrease farm income.
C) have no effect upon farm income.
D) cause farm incomes to fluctuate more than they would without such programs.
Price-Inelastic
A characteristic of a good or service for which demand does not significantly change with a change in price, often essential or with few substitutes.
Agricultural Products
Items derived from agriculture or farming, including crops and livestock.
Price Support Programs
Government initiatives designed to maintain the market price of a commodity or product at a minimum level to protect producers from market fluctuations.
- Consider the implications of agricultural policies on the profitability and performance efficiency of farms.
Verified Answer
CR
Claudia RamirezJul 25, 2024
Final Answer :
A
Explanation :
Price support programs, by setting a minimum price above the equilibrium, tend to increase farm income because the demand for agricultural products is price-inelastic, meaning consumers' purchase quantities do not decrease significantly with a price increase.
Learning Objectives
- Consider the implications of agricultural policies on the profitability and performance efficiency of farms.