Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

A country is highly reliant on producing an agricultural commodity, good X. It chooses to set up a buffer stock scheme for good X. The government sets aside a fixed sum of money to establish and operate the scheme. In which case is the scheme least likely to exhaust its funds?

  • Aglobal demand for good X: constant; cost of storing good X: high; ability of new farmers to start growing good X: easy
  • Bglobal demand for good X: rising; cost of storing good X: low; ability of new farmers to start growing good X: easy
  • Cglobal demand for good X: constant; cost of storing good X: high; ability of new farmers to start growing good X: difficult
  • Dglobal demand for good X: rising; cost of storing good X: low; ability of new farmers to start growing good X: difficult

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