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Unformatted text preview: Page 1 of 2 Agricultural Policy AGB 312 Fall 2009 Homework 4: Income Supports, Marketing Orders, and Nutrition Due Thursday, October 29, at the beginning of class 25 Points Total 1. Income Supports (10 points total) A target price deficiency payment program has the objective of supporting farm incomes but allowing markets to clear (so that government does not end up purchasing, storing and disposing of agricultural commodities). In class, we discussed the basic situation in which we are concerned only with domestic markets. Now, we can extend that to consider the situation in which export markets are important (as they are for many US commodities, especially grains). Consider the situation shown in the diagram below in which a Target Price and a Loan Rate have been set for soybeans. a. (5 points) Re-draw the diagram to indicate the equilibrium in the market with this TP/DP program. Indicate and label on the diagram, the market price, the quantity of soybeans supplied by farmers, the quantity demanded by all consumers and by US consumers, and...
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This note was uploaded on 12/06/2009 for the course AGB 1116 taught by Professor Hamilton during the Winter '09 term at Cal Poly.
- Winter '09