Final answer:
It is true that government agricultural price supports and production restrictions act similarly to an agricultural cartel by stabilizing prices, as long as there is effective enforcement and penalties.
Step-by-step explanation:
The statement that government agricultural price supports and production restrictions act like an agriculture cartel is true. Agricultural price supports, often referred to as price floors, are mechanisms used by governments to stabilize agricultural markets by preventing prices from falling below a certain level. These supports are enacted to smooth out the fluctuations in farm prices and incomes that can vary considerably from year to year. If effectively enforced, with appropriate penalties for non-compliance, these regulations can indeed mimic the stabilizing effect of a cartel by centralizing control over agricultural production and pricing. However, while price supports aim to protect farmers from volatile market conditions, they can also lead to unintended consequences. For example, during China's Great Leap Forward, artificially low food prices led to a catastrophic decline in farm production, which contributed to a massive famine. Thus, the enforcement of price controls must be carefully managed to avoid disrupting the underlying forces of demand and supply that are essential to a healthy economy.