Buffer stocks and stabilization funds - stabilize farm price, Managerial Economics

Buffer stocks and stabilization funds

In this case the government buys up part of the supply when output is excessive, stores this surplus, and resells it to consumers in times of shortage or reduced supply. The amounts that the government must buy or sell to stabilize incomes will therefore depend on the elasticity of demand.

In practice this normally operates through a marketing board controlling the industry, with monopoly powers to fix prices to producers. The Board will usually guarantee a minimum price for the commodity and may make an initial payment to the grower followed by an additional payment if sales by the Board subsequently realize a price in excess of the minimum. Producers of the crop are thus encouraged by the knowledge that any decrease in price during the season will be moderated by Government action.

In the stabilization Funds, the Government fix the price. When the demand is high, the government shall retain the difference, and subsidize the price to producers when demand is low.

Posted Date: 11/27/2012 6:56:10 AM | Location : United States







Related Discussions:- Buffer stocks and stabilization funds - stabilize farm price, Assignment Help, Ask Question on Buffer stocks and stabilization funds - stabilize farm price, Get Answer, Expert's Help, Buffer stocks and stabilization funds - stabilize farm price Discussions

Write discussion on Buffer stocks and stabilization funds - stabilize farm price
Your posts are moderated
Related Questions
BU 5210 Final Summer 2013 Economic Analysis


Diminishing Marginal Utility Diminishing marginal utility as well is to be held responsible for the rise in demand for a product when its price declines. When an individual pur

manual problems solution of demand theory

Classification of oligipoly

Neoclassical Theory The neoclassical theory of economic growth began its career in the fifties and since the mid fifties a sizeable literature has developed. The theory largely

Demand analysis Demand analysis is undertaken to forecast demand, which is a fundamental constituent in managerial decision-making. Demand forecasting is of important because a

Suppose that the price elasticity of demand for cereal is -0.75 and the cross-price elasticity of demand between cereal and the price of milk is -0.9. If the price of milk rises by

Question 1: (a) Describe the argument that market entry erodes profits in the long run. (b) Give some reasons and discuss possible strategies used for profits to persist eve

Relevance of The Law of Diminishing Returns The law of diminishing returns is important in that it is seen to operate in practical situations where its conditions are fulfille