ECON 2000 Chapter : Nov 13 Si Answer
Document Summary
Lockett 116: due to low price elasticity of demand, abrupt changes in farm output have a. Weather, infestation, higher prices make people join or expand not joining only denies him of market share. Demand for food may have stayed inelastic** but small farms could not keep up with or afford the technological improvements that larger farms could. Surplus: the easiest way to increase farm prices without creating a surplus is to have supply restrictions. If the market price of wheat goes above . 94, the farmer can sell the wheat in the open market, repay the ccc, and pocket the difference. If, instead, the price falls below the loan rate, the farmer can simply let the ccc keep the wheat and repay nothing. This implies that the government will pay a farmer the differences between that and the current selling price.
