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Why are the free market and agriculture incompatible?

A) The free market encourages sustainable farming practices.
B) Agriculture relies on government intervention for stability.
C) The free market supports diverse crop cultivation.
D) Agriculture requires centralized planning for efficiency.

1 Answer

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Final answer:

Agriculture relies on government intervention for stability, the free market economy faces challenges in the agricultural sector, and global trade in agricultural products can create dependencies on foreign goods.

Step-by-step explanation:

The free market and agriculture can be seen as incompatible due to several reasons. First, agriculture relies on government intervention for stability, specifically through agricultural price supports. These supports result in governments holding large inventories of agricultural products, and simply giving these products away to the poor would not address the underlying issues of market competition and limited control over prices.

Second, the free market economy works best when there is adequate competition, information, resource mobility, and reasonable prices. However, the agricultural sector often faces challenges with competition, information asymmetry, resource immobility, and externalities, leading to market failures.

Lastly, the global agriculture trade can be a complex issue, as some countries fear competition from more efficient and subsidized agricultural products from other nations. This concern can lead to protectionist measures that limit the free trade of agricultural products and create dependencies on foreign goods.

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