If the Government Establishes a Target Price for Particular Agricultural

question 29

Multiple Choice

If the government establishes a target price for particular agricultural products,then

• A)the government sets a limit on the quantity of a product that a farmer is allowed to bring to market.
• B)farmers are paid to take part of their land out of cultivation,the intent being to reduce supply and raise price to the target level.
• C)farmers are given limits as to the number of acres that can be used to produce a particular product,the intent being to reduce supply and raise price to the target level.
• D)farmers are paid the difference between the market price of their product and a government-determined price.
• E)the government establishes a minimum price that farmers will be paid for their product,which causes the farmers to cut back on the number of acres planted in certain products,which,in turn,causes the price to rise to the target level.

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Definitions:

Net Present Value Method

A valuation method that calculates an investment's worth by determining the present value of its expected future cash flows, subtracting the initial investment cost.

Capital Investment Analysis

The process of evaluating investments in physical assets to determine their potential for profit.

Sensitivity Analysis

Sensitivity Analysis is a financial modeling tool used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Expected Value Analysis

A statistical technique used to predict the likely outcome of a decision or series of actions by considering all possible scenarios and their probabilities.