A Market Price Support Policy Attempts to Assist the Farm

question 17

Multiple Choice

A market price support policy attempts to assist the farm industry by:

• A) taxing the incomes of farmers.
• B) directly subsidizing the incomes of farmers.
• C) establishing price floors in farm output markets.
• D) reducing the amount of resources used in farm production.

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Definitions:

Financing Costs

These are the expenses incurred by a company or an individual when acquiring funds to finance an investment or project, including interest payments, fees, and other charges.

Cash Flow Component

Part of the total amount of money being transferred into and out of a business, affecting its liquidity.

Discount Rate

A rate used to determine the present value of future cash flows.

Incremental Cash Flow Principle

The concept that financial decisions should be made based on the changes in cash flows that the decisions will cause, ignoring cash flows that will not be affected.