Explain how agricultural price supports work and what the effects of the supports are
What will be an ideal response?
Under agricultural price supports, the government sets the price of an agricultural product above the equilibrium price. Consequently, there is an excess quantity of the product supplied. To keep the price at the floor level, the government must buy the surplus. Hence, consumers pay higher prices for the product, and taxpayers pay higher taxes to fund the government's purchases of the product.
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