-Refer to Figure 29.3 for a cotton market with an equilibrium price of P₁ and a Commodity Credit Corporation (CCC) loan rate set above P₁.Given this situation,cotton farmers are most likely to

Question

-Refer to Figure 29.3 for a cotton market with an equilibrium price of P₁ and a Commodity Credit Corporation (CCC)loan rate set above P₁.Given this situation,cotton farmers are most likely to

Quizplus · Accepted Answer

When the CCC loan rate is set above the market equilibrium price, farmers are incentivized to forfeit their cotton to the CCC rather than sell it on the market, as they would not be able to cover the loan amount by selling at the lower market price.