Agriculture Flashcards
0
Q
Why intervene with agriculture?
A
- Fluctuations in the agriculture price
- farm income rose less quickly compared to other incomers
- the lack of economic power of farmers
- competition from abroad
1
Q
Agriculture
A
Strategic industry
2
Q
Causes of short term price fluctuation
SUPPLY
A
- fluctuation in the harvest
* time lag
3
Q
Causes of short term price fluctuation
DEMAND
A
PED for food is inelastic
4
Q
Causes for declining farm incomes
A
Demand problems
YED for food is inelastic
Farmers’ income grow slower than others
5
Q
Government intervention (1)
A
Buffer stock=food storage
- to stabilise prices
- to stabilise farm incomes
6
Q
Government intervention (2)
A
Subsidies
- to increase supply
7
Q
Evaluation of buffer stock
A
- Opportunity cost to the government.
- Subsidies may lead to inefficiency and create a dependancy culture.
- time period issues. Causes issue of affordability
8
Q
Minimum price
A
The price of the good is not allowed to fall below this level.
