A . Explain why government payments to farmers are larger under a target price system than under the parity price system. b. Explain how the government can qualify a target price program to moderate the size of its deficiency payments
a . Under the parity price system, consumers buy goods at the government-determined price, and the
government buys the surplus. Under a target price system, however, consumers buy as much as they
want at the equilibrium price and then the government must also pay farmers the difference between
the equilibrium price and the target price.
b. The government can limit payments to individual producers, or have producers agree to restrict
production in order to be eligible for deficiency payments.
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The antitrust law that prohibits firms from combining or conspiring to restrain trade in interstate commerce is the:
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