Question

Which of the following choices is correct? Multiple Choice

Agricultural price supports can lead to lower prices for agricultural commodities.

Agricultural price supports can lead to higher profits for the government.

Agricultural price supports can lead to higher prices for copper and other minerals.

Agricultural price supports can lead to higher milk prices for consumers.

Answer 1

Agricultural price support is defined as the minimum price set by the government for specific goods which ensures that the market price of the good does not fall below the minimum one set by the government. This ensures that the producers earn a minimum price for their goods.

The price support makes the consumers face a higher price compared to what it would have prevailed, had the price support not been imposed. (This makes the first option incorrect)

Agricultural price support is imposed for agricultural goods and copper and other minerals are not agricultural goods, thereby making the third option incorrect.

The price support system does not alter the profits for the government since any revenue that the government earns through production and sale in the economy is through taxes. This makes the second option incorrect.

Milk is an agricultural commodity under the price support system. Thus, this price support leads to a higher price of milk faced by consumers.

Therefore, the correct answer is option d. Agricultural price supports can lead to higher milk prices for consumers.