Answer to Question #62889 in Economics for yowza

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.

As I am able to select more than one answer it may be multiple...

My best guess is a and d but... I want to understand it before I submit my answer. Thank you.

Answer 1

If we compare general ag price supports vs ag deficiency payments, then the true statements are:
c) Ag price supports reduce producer surplus (PS).
d) Deficiency payments result in lower consumer price for the product.