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

What is decreasing marginal cost? All additional lawn mowed generates less benefit than the earlier lawn à along with decreasing marginal benefit; every additional unit generat

Describe the Optimisation of managerial economics Optimisation techniques are perhaps the most vital to managerial decision making. Given that alternative courses of action are

Green Shield Insurance gives NEMO Corporation with coverage for prescriptions, dental work, and extended health services. Every subscriber uses $435 worth of dental services per ye

Utility Analysis or Cardinal Approach: The Cardinal Approach to the theory of consumer behavior is based upon the concept of utility. It assumes that utility is capable of meas

Difficulties in using fiscal policy There are several problems involved in implementing fiscal policy.  They include: Theoretical problems Monetarists and the Keynesia

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

Disadvantages of product differentiation   a) Product differentiation generally reduces the degree of competition in the market.  It does this in two ways:          i.

PRODUCT DIFFERENTIATION   Product differentiation describes a situation in which there is a single product being manufactured by several suppliers, and the product of each su

Green Shield Insurance gives NEMO Corporation with coverage for prescriptions, dental work, and extended health services. Every subscriber uses $435 worth of dental services per ye