Buffer Stocks Flashcards
1
Q
Pros of buffer stocks
A
Stabilise price of goods
Control inflation through target prices
Govt can make profit
Ensure supply of necessary goods
2
Q
Cons of buffer stocks
A
-Cost of buying supply may be expensive leading to higher taxation
-create complacently and oversupply by producers with knowledge of it being bought
-some goods can’t be used as buffer stock
3
Q
Why agricultural goods are volatile
A
Supply can vary due to weather
Demand is inelastic
SR supply is fixed
