Answer to Question #62934 in Microeconomics for lyd

Question

Which of the following is true when comparing general ag price supports (when government purchases the surplus) vs ag deficiency payments.

a) Because govt purchases the surplus under ag price support policy, the quantity demanded will decrease.
b) Deficiency payments result in higher consumer prices.
c) Ag price supports reduce producer surplus (PS).
d) Deficiency payments result in lower consumer price for the product.

Answer 1

a