Under the deficiency-payment system of agricultural price supports, the cost to government and the taxpayer will be greater:
A) if production quotas are in place.
B) if the demand for the product is inelastic.
C) if the demand for the product is elastic.
D) if foreign governments cease to subsidize agricultural production.

Question

Quizplus · Accepted Answer

If the demand for the product is inelastic, the government will have to buy more of the product at the support price to keep the price up, which will cost more money.

Under the Deficiency-Payment System of Agricultural Price Supports, the Cost