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3 Explain how a price support in the market for an agricultural product creates

a surplus, inefficiency, and unfairness.​

User RCN
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1 Answer

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Answer:

Explained below

Step-by-step explanation:

- A price support in the market for an agricultural product will increase the quantity that's produced and also decrease the quantity being consumed which will in turn create a surplus.

- Now, to maintain this support price, the government usually will buy the surplus and then subsidize the producer.

- This price support will be of great benefit to the producer but on the other hand it will cost the consumer/taxpayer more than the producer will profit thereby creating a deadweight loss.

- In summary, this price support can be said to be inefficient and is normally unfair.

User Sandro Machado
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